Question

The earnings of an oil and gas company in 2022 were $1,313 million, and the company plans for $552 million capital expenditure, and $539,713 million acquisition in 2023. Suppose the company had no other large capital spending, and the target deb-to-equity ratio is 0.38 . The company have 162 million common shares outstanding. How much dividend per share can the company afford to pay out?

Answer 1

The company cannot afford to pay out dividends per share due to negative net profits.

Step-by-step explanation:

To calculate the dividend per share that the company can afford to pay out, we need to consider the company's earnings, capital expenditure, and acquisition amount. First, we subtract the capital expenditure and the acquisition amount from the earnings to find the net profits available for dividends: $1,313 million - $552 million - $539,713 million = -$539,952 million. Since the net profits are negative, the company cannot afford to pay out any dividends. Therefore, the dividend per share is $0.