Hill Country Pools,Inc.,had after-tax earnings of $750,000 and paid out dividends of $325,000.There are 275,000 shares of Hill Country Pools common stock outstanding with a current market value of $27 a share and no preferred stock.What is the dividend payout ratio for this company?

Question

Quizplus · Accepted Answer

The dividend payout ratio is calculated as the dividends paid out divided by the net income.

Dividend payout ratio = Dividends / Net income

Net income = $750,000 
Dividends = $325,000

Dividend payout ratio = $325,000 / $750,000 = 0.43 or 43%

Therefore, the correct answer is B) 43 percent.