Question

Bonita Corporation had net income of $490000 and paid dividends to common stockholders of $43610 in 2019. The weighted average number of shares outstanding in 2019 was 59000 shares. Bonita Corporation's common stock is selling for $55 per share on the New York Stock Exchange.

Bonita Corporation's payout ratio for 2019 is:


A.12.0%

B. 16.0%

C. $8.31 per share

D. 8.9%.

Answer 1

8.9%

Step-by-step explanation:

The payout ratio compares the dividends paid to common stockholders with the earnings generated on their behalf in the year under review.

The payout ratio,in another words,is the proportion of earnings attributable to ordinary shareholders which was distributed to them in form of dividends.

The total earnings attributable to ordinary shareholders is the net income of $490,000,out of which only $43,610 was handed to them as dividends.

Payout ratio=$43,610/$490,000=8.9%