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During 2016, Pattar Corp.reported after-tax profit of $450,000 and paid $75,000 in common dividends.The weighted average number of common shares issued in 2016 was 150,000.There are no preferred shares issued.At year end, Pattar's common shares are selling for $60 per share on the Toronto Stock Exchange.
-Pattar's payout ratio for 2016 is
A)$0.50.
B)0.8%.
C)6.0%.
D)16.7%.

Question

Use the following information for questions 
During 2016, Pattar Corp.reported after-tax profit of $450,000 and paid $75,000 in common dividends.The weighted average number of common shares issued in 2016 was 150,000.There are no preferred shares issued.At year end, Pattar's common shares are selling for $60 per share on the Toronto Stock Exchange.
-Pattar's payout ratio for 2016 is
A)$0.50.
B)0.8%.
C)6.0%.
D)16.7%.

Quizplus · Accepted Answer

Payout ratio is the percentage of after-tax profits that are paid out as dividends to shareholders. 
Payout ratio = Dividends / After-tax profit 
Payout ratio = $75,000 / $450,000 
Payout ratio = 16.7%

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