From the information below, compute the payout ratio for Kevin's Trailers. $$\begin{array} { l r }
\text { Net Income } & \$ 250 \
\text { Cash Dividends (common) } & 40 \
\text { Retained Earnings } & 500 \
\text { Stock Dividends (common) } & 10
\end{array}$$
A)20%.
B)16%.
C)8%.
D)4%.

Question

From the information below, compute the payout ratio for Kevin's Trailers. $$\begin{array} { l r } 
\text { Net Income } & \$ 250 \
\text { Cash Dividends (common) } & 40 \
\text { Retained Earnings } & 500 \
\text { Stock Dividends (common) } & 10
\end{array}$$
A)20%.
B)16%.
C)8%.
D)4%.

Quizplus · Accepted Answer

The payout ratio is calculated as Cash Dividends divided by Net Income. Here, it is $40 / $250 = 0.16 or 16%.

From the Information Below, Compute the Payout Ratio for Kevin's