You are provided with the following data on the NHC. The company has stable earnings growth of
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Question:
(i) Analyze and interpret the return on equity for NHC and comment on whether the firm is value adding or value destroying.
(ii) If NHC were to increase its dividend pay-out ratio to 0.8, Consider the impact on the P/E ratio (assuming the company's return on equity and cost of equity are constant)
(iii) Analyze and interpret NHCs price earnings growth (PEG) ratio and if the sector average PEG ratio is 3.5, comment on the PEG ratio for NHC.
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