The Following Data Were Reported for Marcellan Company

question 153

Essay

The following data were reported for Marcellan Company: $$\begin{array}{l}\begin{array} { | l | r | } \hline \text { Profit } & \$ 275,000 \\\hline \text { Total dividend declared and paid on common stock } & 0.60 \text { per share } \\\hline \text { Common stock outstanding, par } \$ 10 & \$ 1,750,000 \\\hline \text { Market price } & 20.00 \text { per share } \\\hline \text { Cash flows from operating activities } & \$ 280,000 \\\hline\end{array}\\\\\text { Compute the following ratios: }\\\begin{array} { | l | l | } \hline \text { (a) } & \text { Dividend yield } \\\hline \text { (b) } & \text { Price/earnings ratio } \\\hline \text { (c) } & \text { Quality of earnings } \\\hline\end{array}\end{array}$$

---

Definitions:

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Financial Ratios

Quantitative measures derived from financial statement analysis used by investors and analysts to evaluate a company's financial health and performance.

P/E Ratio

The price-to-earnings (P/E) ratio is a valuation measure comparing the current share price of a company to its per-share earnings.

Market/Book Ratio

A financial ratio comparing a company's current market price to its book value, used to evaluate whether a stock is over or undervalued.