Ratios in the ?nancial press
Newspapers such as the Financial Times and the Wall Street Journal publish share price and dividend data for quoted companies every day. Set out below are data for three large international retailers. The companies have their headquarters in France, UK and USA respectively. Although the business strategy each pursues is slightly different, investors benchmark each company's performance against the others'. The share price and market capitalisation figures are taken from the 29 April 2002 edition of the Financial Times.
|
|
Share price (closing)
|
Mkt cap. (in million)
|
Yield, gross
|
P/E ratio
|
|
Carrefour
|
A49.52
|
A35,216
|
1.1
|
29.1
|
|
Tesco
|
£2.63
|
£18,214
|
2.1
|
21.8
|
|
Wal-Mart
|
$55.80
|
$248,378
|
0.5
|
37.4
|
(i) Mkt cap.: Shares outstanding ´ share price
(ii) Yield, gross: Per-share dividend (before withholding tax) 100 Share price
Required
(a) Estimate Carrefour's net income (in euros) in the latest 12 months (to end-March 2002).
(b) Calculate the dividend cover (or its reciprocal, the payout ratio) as of end-April 2002 for each of the three companies.
(c) Wal-Mart's P/E ratio in April 2002 is much higher than that of the other two companies. Suggest possible reasons for this.