Figure 16-1. Starbuck Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000 in 2011.The weighted average number of shares outstanding in 2011 was 50,000 shares.Starbuck Corporation's common stock is selling for $40 per share on the New York Stock Exchange.
Refer to Figure 16-1.Starbuck's dividend payout ratio for 2011 is
A)$5 per share.
B)0.25.
C)0.20.
D)0.125.

Question

Quizplus · Accepted Answer

Dividend Payout Ratio = Dividends Paid / Net Income

Dividends Paid = $50,000
Net Income = $250,000

Dividend Payout Ratio = $50,000 / $250,000 = 0.2 or 20%