Payout Ratio and Return on Stockholders Equity
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Problem C - II ? Ratios (10 points)
The following information is available for Balken Corporation:
2006 2005
Common stockholders' equity $1,100,000 $900,000
Dividends paid to common stockholders 62,500 57,600
Dividends paid to preferred stockholders 25,000 20,000
Net income 250,000 240,000
Common shares outstanding 100,000 100,000
Instructions
Calculate each of the following for 2006:
(a) Payout ratio
(b) Return on common stockholders' equity
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Solution Summary
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Payout ratio = Dividend per share/ Earnings per share = .625/2.25= 27.8%
Note:
Dividend per share = Dividend paid to ...
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