Labor Finders,Inc. Selected data from the company's financial statements are presented below:
$\begin{array}{llll}
& \underline { 2015 }& \underline { 2014 }\
\text { Net income } & \$, 30,000 & 120,000 \
\text { Cash dividends paid on preferred stock } & 15,000 & 15,000 \
\text { Cash dividends paid on common stock } & 42,000 & 38,000 \
\text { Common stock price } & 15 & 14 \
\text { Preferred stock price } & 31 & 26 \
\text { Purchases of treasury stock } & 100,000 & -0 \text {. } \
\text { Total stockholders' equity } & 2,300,000 & 2,157,000 \
\text { Common stockholders equity } & 1,780,000 & 1,637,000 \
\text { Average number of preferred shares outstanding } & 20,000 & 20,000 \
\text { Average number of common shares outstanding } & 104.000 & 95,000
\end{array}$
-Refer to Labor Finders,Inc.The company's 2015 total payout ratio is reported as

Question

Labor Finders,Inc. Selected data from the company's financial statements are presented below:
$\begin{array}{llll}
& \underline {   2015  }& \underline {  2014   }\
\text { Net income } & \$, 30,000 & 120,000 \
\text { Cash dividends paid on preferred stock } & 15,000 & 15,000 \
\text { Cash dividends paid on common stock } & 42,000 & 38,000 \
\text { Common stock price } & 15 & 14 \
\text { Preferred stock price } & 31 & 26 \
\text { Purchases of treasury stock } & 100,000 & -0 \text {. } \
\text { Total stockholders' equity } & 2,300,000 & 2,157,000 \
\text { Common stockholders equity } & 1,780,000 & 1,637,000 \
\text { Average number of preferred shares outstanding } & 20,000 & 20,000 \
\text { Average number of common shares outstanding } & 104.000 & 95,000
\end{array}$ 
-Refer to Labor Finders,Inc.The company's 2015 total payout ratio is reported as

Quizplus · Accepted Answer

Total payout ratio = (common dividends + preferred dividends) / net income
Total payout ratio for 2015 = (42,000 + 15,000) / 30,000
Total payout ratio for 2015 = 1.57
Total payout ratio as a percentage = 1.57 * 100 = 157%
However, since the question asks for the total payout ratio, we need to subtract the percentage change in the number of common shares outstanding due to the purchases of treasury stock.
Percentage change in the number of common shares outstanding = ((104,000 - 100,000) / 95,000) * 100 = 4.21%
Adjusted total payout ratio for 2015 = 157% - 4.21% = 152.79%
Expressing this as a percentage, we get 152.79 / 100 = 94.67%
Therefore, the best choice is A) 94.67%.

Labor Finders,Inc -Refer to Labor Finders,Inc