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Shannon Corporation had profit of $250,000 and paid dividends to common shareholders of $50,000 in 2013. The weighted average number of shares issued in 2013 was 50,000 shares. Shannon Corporation's common shares are selling for $40 per share on the Toronto Stock Exchange.
-Shannon Corporation's payout ratio is
A) $5 per share.
B) 25%.
C) 20%.
D) 12.5%.

Question

Quizplus · Accepted Answer

The payout ratio is calculated as dividends divided by profit. Here, it is $50,000 / $250,000 = 20%.

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