Rush and Grubb, a manufacturing concern, has a dividend payout ratio of 40%. If the company has a net income of $150,000 and 80,000 outstanding shares of stock, what dividend will be paid on each share of stock?

Question

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The dividend payout ratio is 40%, which means that 40% of the net income will be paid out as dividends. The net income is $150,000, so the amount of dividends to be paid out is $150,000 x 0.40 = $60,000. There are 80,000 outstanding shares of stock, so the dividend per share will be $60,000 / 80,000 = $0.75.

Rush and Grubb, a Manufacturing Concern, Has a Dividend Payout