Keyton Corporation's net operating income in Year 2 was $43,714, net income before taxes was $30,714, and the net income was $21,500. Total common stock was $200,000 at the end of both Year 2 and Year 1. The par value of common stock is $4 per share. The company's total stockholders' equity at the end of Year 2 amounted to $1,148,000 and at the end of Year 1 to $1,130,000. The company declared and paid $3,500 dividends on common stock in Year 2. The market price per share was $8.43 at the end of Year 2. Thecompany's dividend payout ratio for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) 0.8%
B) 1.8%
C) 16.3%
D) 11.4%

Question

Quizplus · Accepted Answer

To calculate the dividend payout ratio, we need to divide the dividends declared and paid on common stock by the net income. 
Dividend payout ratio = dividends declared and paid on common stock / net income

Dividends declared and paid on common stock = $3,500 
Net income = $21,500

Dividend payout ratio = $3,500 / $21,500 = 0.163 or 16.3% (rounded to 2 decimal places)

Therefore, the dividend payout ratio for Year 2 is 16.3%.

Keyton Corporation's Net Operating Income in Year 2 Was $43,714