Fluno Corporation has 1 million shares outstanding at the end of fiscal 2005. Its stock is trading at $15 per share. It issued $0.6 million in dividends, and had net income of $1million in fiscal 2005. At the end of 2005, its total assets, liabilities and retained earnings were $25 million, $15 million and $7.5 million, respectively. Fluno's price to book ratio and dividend yield ratios for 2005 are: $\begin{array}{|c|c|c|}
\hline
&\text { Price to Book } & \text { Dividend Yield } \
\hline A)&2 & 60 \% \
\hline B)&1.5 & 60 \% \
\hline C)&1.5 & 4 \% \
\hline D)&2 & 4 \% \
\hline
\end{array}$
A) Option A
B) Option B
C) Option C
D) Option D

Question

Fluno Corporation has 1 million shares outstanding at the end of fiscal 2005. Its stock is trading at $15 per share. It issued $0.6 million in dividends, and had net income of $1million in fiscal 2005. At the end of 2005, its total assets, liabilities and retained earnings were $25 million, $15 million and $7.5 million, respectively. Fluno's price to book ratio and dividend yield ratios for 2005 are: $\begin{array}{|c|c|c|}
\hline 
&\text { Price to Book } & \text { Dividend Yield } \
\hline A)&2 & 60 \% \
\hline B)&1.5 & 60 \% \
\hline C)&1.5 & 4 \% \
\hline D)&2 & 4 \% \
\hline
\end{array}$
A) Option A
B) Option B
C) Option C
D) Option D

Quizplus · Accepted Answer

The price to book ratio is calculated as the market price per share divided by the book value per share. The book value is total assets minus total liabilities, which is $25 million - $15 million = $10 million. The book value per share is $10 million / 1 million shares = $10. The price to book ratio is $15 / $10 = 1.5. The dividend yield is calculated as the annual dividends per share divided by the market price per share. The dividends per share are $0.6 million / 1 million shares = $0.6. The dividend yield is $0.6 / $15 = 0.04 or 4%.

Fluno Corporation Has 1 Million Shares Outstanding at the End