Tito Corporation had net income of $2,000,000 and paid dividends to common stockholders of $300,000 in 2022.The weighted-average number of shares outstanding in 2022 was 400,000 shares.Tito Corporation's common stock is selling for $50 per share on the NASDAQ.Tito Corporation's payout ratio for 2022 is

Question

Quizplus · Accepted Answer

The payout ratio is the percentage of net income that is paid out as dividends to common stockholders.

Payout Ratio = Dividends / Net Income

Payout Ratio = $300,000 / $2,000,000

Payout Ratio = 0.15 or 15%

Therefore, the best choice is C because it represents Tito Corporation's payout ratio for 2022.

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