Leigh Fibers has 6 million shares outstanding. This year Leigh will have operating income (EBIT) of $36.4 million, interest expenses of $5.8 million, and depreciation expenses of $6.2 million. What will be Leigh's dividend per share if the company has a payout ratio of 30%? Assume a marginal tax rate of 40%.

Question

Quizplus · Accepted Answer

Net income = EBIT * (1 - Tax rate) + Depreciation - Interest expenses= 36.4 * (1 - 0.4) + 6.2 - 5.8= 21.84 + 6.2 - 5.8= 22.24Dividend per share = Net income * Payout ratio / Number of shares outstanding= 22.24 * 0.3 / 6= 0.92

Leigh Fibers Has 6 Million Shares Outstanding