Franklin Electric is presently generating earnings available to ordinary shareholders of $7.25 per share.The firm's income tax rate is 40%.Franklin is paying a dividend to the preference shareholders of $2.10 per share.The firm's dividend payout ratio on ordinary shares is 20%.What is the amount per share that Franklin will pay in dividends to ordinary shareholders?

Question

Quizplus · Accepted Answer

The amount of earnings available to ordinary shareholders after paying preferred dividends is $7.25 - $2.10 = $5.15 per share. The dividend payout ratio on ordinary shares is 20%, so the dividend per share will be $5.15 * 0.20 = $1.45.

Franklin Electric Is Presently Generating Earnings Available to Ordinary Shareholders