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 Starbuck's dividend payout ratio for 2013 is
A) $5 per share.
B) 0.25.
C) 0.20.
D) 0.125.

Question

Quizplus · Accepted Answer

Dividend payout ratio is the amount of dividends paid to common stockholders as a percentage of net income.

Dividend payout ratio = Dividends paid to common stockholders / Net income

Dividend payout ratio = $50,000 / $250,000 = 0.20

Therefore, the answer is option C.

Starbuck Corporation Had Net Income of $250,000 and Paid Dividends