You are presented with the following information relating to Hedge public limited company for the year to

Question:

You are presented with the following information relating to Hedge public limited company for the year to 31 May 2011:

1. The company has an issued and fully paid share capital of £500,000 ordinary shares of £1 each. There are no preference shares.

2. The market price of the shares at 31 May 2011 was £3.50.

3. The net profit after taxation for the year to 31 May 2011 was £70,000.

4. The directors are proposing a dividend of 7p per share for the year to 31 May 2011.

Required:

Calculate the following accounting ratios:

(a) Dividend yield

(b) Dividend cover

(d) Price/earnings ratio.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...