Figure 16-1.
Starbuck Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000 in 2013. The weighted average number of shares outstanding in 2013 was 50,000 shares. Starbuck Corporation's common stock is selling for $40 per share on the New York Stock Exchange.
-Refer to Figure 16-1. Starbuck's dividend payout ratio for 2013 is

Question

Quizplus · Accepted Answer

Dividend payout ratio is calculated as dividends paid divided by net income. In this case, the dividend payout ratio would be $50,000/$250,000 = 0.20 or 20%. This means that for every dollar of net income, 20 cents is paid out as dividends to common stockholders.

Figure 16-1. Starbuck Corporation Had Net Income of $250,000 and Paid Dividends