Question

Assume Colgate-Palmolive reports the following dollar balances in its retained earnings account.($ millions) 2015 2014Retained earnings $18,528 $18,388

During 2015, Colgate-Palmolive reported net income of $2,050 million.
a. What amount of dividends, if any, did Colgate-Palmolive pay to its stockholders in 2015?
b. What percent of its net income did Colgate-Palmolive pay out as dividends in 2015?Round to the nearest whole percentage.

Answer 1

a) Dividend: $ 1,910

b) Dividend pay out ratio: 93%

Step-by-step explanation:

a) Dividend = Opening retained earnings + net income - Closing retained earnings

Dividend = 18,388 + 2,050 - 18,528

Dividend = 1,910

b) Dividend pay out percent: Dividend / Net Income

Dividend pay out percent: 1,910 / 2,050 = 93%