Tito Corporation had net income of $2,000,000 and paid dividends to common stockholders of $500,000 in 2014. The weighted average number of shares outstanding in 2014 was 500,000 shares. Tito Corporation's common stock is selling for $50 per share on the NASDAQ. Tito Corporation's payout ratio for 2014 is

Question

Quizplus · Accepted Answer

The payout ratio is calculated by dividing the dividends paid to common stockholders by the net income. Here, it is $500,000 / $2,000,000 = 0.25 or 25%.

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