Information from the financial statements is provided in the following table:
$\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\
\text { Net income } & \$ 150,000 & \$ 120,000 \
\text { Cash dividends paid on preferred shares } & 15,000 & 15,000 \
\text { Cash dividends paid on common shares } & 42,000 & 38,000 \
\text { Average number of preferred shares outstanding } & 20,000 & 20,000 \
\text { Average number of common shares outstanding } & 105,000 & 95,000 \
\text { Market price per share of common shares at year end } & 25.10 & 22.70
\end{array}$
-Refer to the figure Randstad Inc.What is the dividend yield ratio for Year 2?

Question

Information from the financial statements is provided in the following table:
 $\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\
\text { Net income } & \$ 150,000 & \$ 120,000 \
\text { Cash dividends paid on preferred shares } & 15,000 & 15,000 \
\text { Cash dividends paid on common shares } & 42,000 & 38,000 \
\text { Average number of preferred shares outstanding } & 20,000 & 20,000 \
\text { Average number of common shares outstanding } & 105,000 & 95,000 \
\text { Market price per share of common shares at year end } & 25.10 & 22.70
\end{array}$
-Refer to the figure Randstad Inc.What is the dividend yield ratio for Year 2?

Quizplus · Accepted Answer

The dividend yield ratio for Year 2 is calculated as (Cash dividends paid on common shares / (Average number of common shares outstanding * Market price per share of common shares at year end)) * 100. For Year 2, this is ($42,000 / (105,000 * $25.10)) * 100 = 1.6%.

Information from the Financial Statements Is Provided in the Following