Question

The financial statements for Dividendosaurus, Inc., for the current year are as follows: Balance Sheet Statement of Income and Retained Earnings Cash $100,Sales $3,000 Accounts receivable 200,Cost of goods sold (1,600),Inventory 50,Net fixed assets 600,Gross profit $1,400,Operations expenses (970),Total $950,Operating income $430 Accounts payable $140, Interest expense (30) ,Long-term debt 300,Income before tax $400,Capital stock 260 ,Income tax (200), Retained earnings 250 ,Net income $200 ,Total $950 Add: Jan.1 retained earnings 150 Less: dividends (100) Dec.31 retained earnings $250,Dividendosaurus has a dividend-payout ratio of:_______.
A. 19.6%
B. 28.6%
C. 40.0%
D. 50.0%

Answer 1

Answer:

Option D,50% is the correct answer.

Explanation:

Dividend payout ratio is an important financial measure which measures the ratio of company's dividends payment to net income of the company.

This implies the portion of income earned in a year given to shareholders as dividends while the remains is kept in the business as source of further growth.

Dividend payout ratio=dividends/net income=$100/$200=50%