Question

Compute the Dividend Yield Ratio:

Dividends Paid =$240,000, Net Income =$800,000
Common Stock Shares Issued =100,000
Common Stock Shares Outstanding =60,000
Market Price per Share =$25.00
Dividend Payout Ratio = Dividends / Net Income OR Dividends Per Share / Earnings Per Share
Dividend Yield Ratio =Dividends per Share /Market Price per Share.
Enter your Answer as a Percent with the percent sign after your number, no decimals, Round to the Nearest Whole percent, example = 5.5 = 6%

Answer 1

To compute the Dividend Yield Ratio, the Dividends Paid are divided by the Common Stock Shares Outstanding to find the dividends per share. This is then divided by the Market Price per Share to get the Dividend Yield Ratio, which in this case is 16% when rounded to the nearest whole percent.

Step-by-step explanation:

To compute the Dividend Yield Ratio, you must first calculate the dividends per share (DPS) using the information provided. The Dividends Paid are $240,000, and there are 60,000 Common Stock Shares Outstanding which gives us a DPS of $4.00 ($240,000 dividends ÷ 60,000 shares outstanding).

Then, use the Market Price per Share of $25.00 to compute the Dividend Yield Ratio, which is the DPS divided by the market price per share. So, the Dividend Yield Ratio equals $4.00 ÷ $25.00 = 0.16 or 16% when expressed as a percent. Hence, the Dividend Yield Ratio rounded to the nearest whole percent is 16%.