Problem:
A and B, Inc. is primarily engaged in the worldwide production, processing, distribution, and marketing of food products. The following information is from its 2003 annual report:
2003 2002
Earnings per share $1.08 $1.14
Cash dividends per common share $0.80 $0.76
Market price per common share $12.94 $15.19
Common shares outstanding 25,380,000 25,316,000
Total assets $1,264,086,000 $1,173,924,000
Total liabilities $823,758,000 $742,499,000
Non redeemable preferred stock $16,600,000 $16,600,000
Preferred dividends $4,567,000 $930,000
Net income $32,094,000 $31,049,000
a) Based on these data, compute the following for 2003 and 2002:
1. Percentage of earnings retained
2. Price/earning ratio
3. Dividend pay out
4. Dividend yield
5. Book value per share
b) Discuss your findings from the viewpoint of a potential investor.