The following information relates to conejo corporation for last year: book value per share $ 40 par value per share $ 12 dividends per share $ 5 dividend payout ratio 20 % dividend yield ratio 10 % what is conejo's price-earnings ratio for last year?

price earning ratio = 2

Explanation:

given data

Book value = $40 per share

Par value = $12 per share

Dividends =  $5 per share

Dividend payout ratio = 20 %  

Dividend yield ratio =  10 %

solution

first we get here market price per share by dividend yield ratio that is express as

dividend yield ratio = Dividends per share ÷ market price per share    ........................1

put here value we get

market price per share =

market price per share = $50

and

now we get earning per share  by dividend payout ratio that is express as

dividend payout ratio  = dividend per share ÷  earning per share    .................................2

put here value we get

earning per share  =

earning per share  = $25

so now we get here price earning ratio that is

price earning ratio = market price per share ÷ earning per share ..........................3

put here value we get

price earning ratio =

price earning ratio = 2

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