Dividend yield ratio 121 177 aeon company has higher

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Dividend Yield Ratio 1.21 1.77 Aeon Company has higher dividend yield ratio than The Store. This shows that Aeon Company pays out more dividends each year relative to its share price. In the shareholder’s ratios, The Store Company shows higher ratios than Aeon Company in earnings per share ratio. However, this cannot prove that The Store will pay higher dividend, because Aeon Company has higher dividend yield ratio. RATIO THE STORE AEON COMMENT Capital Structure Ratios Gearing Ratio 14.59% 4.08% The Store is considered as a high- geared company while Aeon Company is a low-geared company. Aeon Company has the commitment to pay all the interest on its long term loans. According to the capital structure ratios, the external fund of Aeon Company is only 4.08% which is much lower than The Store which is 14.59%.
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As a result, based on all the ratios calculated above, I will recommend to my client to invest in Aeon Company. This is because Aeon Company has higher profitability ratios compared to The Store. For instance, the gross profit margin of Aeon Company is 14.9% higher than The Store. Aeon Company is more efficient to turn business activity into profits. Besides, the dividend yield ratio of Aeon Company is also higher than The Store. This shows that Aeon Company distribute high amount of cash dividends to its common shareholders relative to the market value per share. Therefore, I can show to my client that his investment in Aeon Company’s stock can generate high cash flows in the form of dividends or increases in asset value by stock appreciation. However, the liquidity ratios of Aeon Company suggests the other way. This may be due to high cost of purchases that caused the increase of liabilities. High amount of liabilities caused high creditors ratio. As an investor, I will invest in Aeon company with high profit although it has higher risk compared to The Store.
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vi) The only differences between the current and acid test ratio is that inventory is omitted from the acid test ratio. Why is it appropriate to remove inventory from the analysis? The only differences between the current and acid test ratio is that inventory is omitted from the acid test ratio. It is appropriate to remove inventory from the analysis because inventory has difficulty to convert into cash. Inventory is considered as less-liquid assets compared to other components of current assets such as cash, debtors and bank. Therefore, it is assumed that after removing relatively less-liquid inventory, the remaining current assets are more-liquid. Quick ratio focuses on those more-liquid assets of a company by excluding inventories. Besides, quick ratio shows how a company pay off its current liabilities without waiting to sell off its inventory. Another beneficial use is to compare the quick ratio with the current ratio. If the current ratio is higher than quick ratio, it is clear to indicate that the company's current assets are depend on its inventory because current ratio do not excluding inventory. For a business that have a lot of current assets tied up in inventory, the lenders and suppliers will be looking at the quick ratio of the company. However, most of the people will
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