Rapid Sign Corporation
Selected data from the financial statements are presented in the figure:
$\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\
\text { Net income } & \$ 110,000 & \$ 123,000 \
\text { Cash dividends paid on common shares } & 42,000 & 38,000 \
\text { Average number of common shares outstanding } & 140,000 & 145,000 \
\text { Repurchased } & 70,000 & 0 \
\text { Market price per share of common shares at vear end } & 16.00 & 13.00
\end{array}$
-Refer to the figure Rapid Sign Corporation.What is the share repurchase payout ratio for Year 2?

Question

Rapid Sign Corporation
Selected data from the financial statements are presented in the figure:
 $\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\
\text { Net income } & \$ 110,000 & \$ 123,000 \
\text { Cash dividends paid on common shares } & 42,000 & 38,000 \
\text { Average number of common shares outstanding } & 140,000 & 145,000 \
\text { Repurchased } & 70,000 & 0 \
\text { Market price per share of common shares at vear end } & 16.00 & 13.00
\end{array}$
-Refer to the figure Rapid Sign Corporation.What is the share repurchase payout ratio for Year 2?

Quizplus · Accepted Answer

The share repurchase payout ratio is calculated as the repurchase amount divided by net income. In Year 2, the repurchase amount is $70,000 and net income is $110,000. Thus, the ratio is $70,000 / $110,000 = 63.6%, which rounds to 63.8%.

Rapid Sign Corporation Selected Data from the Financial Statements Are

Rapid Sign Corporation
Selected Data from the Financial Statements Are