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Industry Analysis

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1) Find the most recent three year financial data on US Steel, Microsoft, Disney, and Home Depot. Provide three years of ratios for each:

Retention ratio US Steel Microsoft Disney Home Depot
Year 1 (most current)
Year 2
Year 3

Net profit margin US Steel Microsoft Disney Home Depot
Year 1 (most current)
Year 2
Year 3

Equity turnover US Steel Microsoft Disney Home Depot
Year 1 (most current)
Year 2
Year 3

Total Asset turnover US Steel Microsoft Disney Home Depot
Year 1 (most current)
Year 2
Year 3

Total Assets / Equity US Steel Microsoft Disney Home Depot
Year 1 (most current)
Year 2
Year 3
2) You are provided / estimate the following information for stock DEF. You expect to sell the stock one year from now for $26 and expect one more dividend payment before you sell.
How much are the dividend payment and stock worth today?

Earnings per share: this year $5.00
Dividends per share: this year $1.50
Estimated earnings per share: next year $6.25
Required rate of return 10%
Expected sales price in one year $26.00
3) The dividend payout ratio for firm ELO is 60%, k is 13% and the expected growth of dividends is 7%.

a) What is the current earnings multipler?

b) You expect the payout ratio to decline to 50%, all else equal. What is the new earnings multiplier?

c) With the payout ratio at 60%, the rate of inflation increases 3% while the growth rate increases 2%. What is the new earnings multiplier?

d) With the payout ratio at 60%, the rate of inflation is expected to drop by 3% while the growth rate decreases by 1%. What is the new earnings multipler?

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Solution Summary

The solution has some details about some ratios for four companies, stock valuation and earnings multiplier

$2.19