Tito Corporation had net income of $2,000,000 and paid dividends to common stockholders of $300,000 in 2017. The weighted average number of shares outstanding in 2017 was 400,000 shares. Tito Corporation's common stock is selling for $50 per share on the NASDAQ. Tito Corporation's payout ratio for 2017 is
A) $5 per share.
B) 12%.
C) 15%.
D) 7%.

Question

Quizplus · Accepted Answer

Payout Ratio = Dividends Paid / Net Income 
Payout Ratio = $300,000 / $2,000,000 
Payout Ratio = 0.15 or 15%
Therefore, the correct answer is C) 15%.

Tito Corporation Had Net Income of $2,000,000 and Paid Dividends