Starbuck Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000 in Year 1.The weighted average number of shares outstanding in Year 1 was 50,000 shares.Starbuck Corporation's common stock is selling for $40 per share on the New York Stock Exchange. ?
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Starbuck's dividend payout ratio for Year 1 is
A) $5 per share.
B) 0.25.
C) 0.20.
D) 0.125.

Question

Starbuck Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000 in Year 1.The weighted average number of shares outstanding in Year 1 was 50,000 shares.Starbuck Corporation's common stock is selling for $40 per share on the New York Stock Exchange. ?
- 
Starbuck's dividend payout ratio for Year 1 is
A) $5 per share.
B) 0.25.
C) 0.20.
D) 0.125.

Quizplus · Accepted Answer

The dividend payout ratio is calculated as dividends paid divided by net income. For Starbuck Corporation, this is $50,000 / $250,000 = 0.20.

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