Business – 10.2 Analysis of published accounts – Investment ratios | e-Consult
10.2 Analysis of published accounts – Investment ratios (1 questions)
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Dividend yield calculation:
- Beta Corp: (£1.80 ÷ £30.00) × 100% = 0.06 × 100% = 6.0%
- Gamma Ltd: (£2.50 ÷ £55.00) × 100% = 0.04545 × 100% ≈ 4.5%
Based solely on dividend yield, Beta Corp offers the higher cash return at 6.0% compared with Gamma Ltd’s 4.5%. Assuming the two firms have comparable risk and payout sustainability, Beta Corp would be the more attractive option for an investor seeking dividend income.