The payout ratio can be calculated by dividing

Question

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The payout ratio measures the percentage of earnings paid out as dividends to shareholders. It can be calculated by dividing cash dividends by net income less preferred dividends (Option B). Option A only considers dividends paid out per share and earnings per share, but not the overall percentage. Option C only considers the market price per share, which does not necessarily reflect the company's financial performance. Option D includes both options A and B, but net income less preferred dividends is the more relevant figure to use for calculating the payout ratio.

The Payout Ratio Can Be Calculated by Dividing