Calculate payout ratio given the following information: cash dividends paid = $35,525; sales = $900,000; cost of goods sold = $625,000; selling and administrative expenses = $100,000; interest
Expense = $30,000; tax rate= 30%.

Question

Quizplus · Accepted Answer

To calculate the payout ratio, first determine the net income. Sales - COGS - Selling/Admin Expenses - Interest Expense = Earnings Before Tax (EBT). EBT * (1 - Tax Rate) = Net Income. Then, Payout Ratio = Cash Dividends Paid / Net Income.

Calculate Payout Ratio Given the Following Information: Cash Dividends Paid