Ale Corporation had net income of $240000 and paid dividends to common stockholders of $40000 in 2017. The weighted average number of shares outstanding in 2017 was 60000 shares. Ale Corporation's common stock is selling for $60 per share on the New York Stock Exchange. Ale Corporation's payout ratio for 2017 is

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Quizplus · Accepted Answer

The payout ratio is the percentage of earnings paid out in dividends to common stockholders. To calculate the payout ratio, divide the dividends paid by the net income: $40000/$240000 = 0.167 or 16.7%. Therefore, the correct answer is C.

Ale Corporation Had Net Income of $240000 and Paid Dividends