Question

The following information pertains to Marsh Company. Assume that all balance sheet amounts represent average balance figures.Total asset $400,000Stockholders' equity—common 200,000Total stockholders' equity 280,000Sales revenue 120,000Net income 25,000Number of shares of common stock 8,000Common dividends 9,000Preferred dividends 6,000What is Marsh's payout ratio?a. 60%.b. 36%.c. 24%.d. 7.5%.

Answer 1

36%

Step-by-step explanation:

The dividend payout ratio is a very important financial metric in accounting. This ratio expresses the amount of dividends paid out to shareholders as a percentage of the net income of the company. The formula for this metric is:

Dividend Payout Ratio =
`(Amount of dividend paid to common stockholders)/(Net Income) *100`

=
`(9000)/(25,000) *100`

= 36%