Lucas Inc. earned $15 million last year and retained $6 million. Lucas has 5 million shares outstanding, and the current price of Lucas shares is $30 per share. What is the dividend payout ratio?

Question

Quizplus · Accepted Answer

The dividend payout ratio is calculated as the dividends paid divided by the net income. Lucas Inc. retained $6 million, so it paid out $9 million in dividends ($15 million - $6 million). The dividend payout ratio is $9 million / $15 million = 60%.

Lucas Inc Earned $15 Million Last Year and Retained $6 Million