Question

The following information pertains to Marsh Company. Assume that all balance sheet amounts represent average balance figures.Total asset $400,000Stockholder's equity-common 200,000Total Stockholders' equity 280,000Sales revenue 120,000Net income 25,000Number of shares of common stock 8,000Common dividends 5,000Preferred dividends 6,000What is Marsh's payout ratio?a) 7.5%.b) 20%.c) 24%.d) 36%.

Answer 1

b) 20%

Step-by-step explanation:

Stockholder's equity

Net Income $ 25,000

Common Dividends -$ 5,000

Preferred Dividends -$ 6,000

TOTAL $ 14,000

Common Dividends

-$ 5.000 / $ 25.000 = 20%

Net Income

Dividend per share $0,63 / (Earning per Share) $3,13 = 20%

Dividend per share $0,63 ==> Common Div. ($5,000) / 8.000 (Q. Common)

Earning per share $3,13 ==> Net Income ($25,000) / 8.000 (Q. Common)