The following information for 2019 is provided for two public companies in the same industry: ...................................................................... ABC
Question:
The following information for 2019 is provided for two public companies in the same industry:
......................................................................ABC Ltd.ZYZLtd.
Earnings per share.........................................$10.50$3.25
Dividends paid per share..............................2.501.50
Market price per share..................................120.0028.00
Net sales........................................................100,00010,000
Gross profit ..................................................46,0003,500
Profit.............................................................8,100970
Required:
Answer the following questions about the two companies andexplain the reason for your answer. Use the information provided to calculate the ratios needed to support your answers.
a.Based on the above information, which company is more profitable?
b.About which company are investors more optimistic? Explain.
c.In which company would investors prefer to buy shares for growth potential? Explain.
d.In which company would they prefer to buy shares if their goal is dividend income?