Montreal Electronics has the following data available: $\begin{array}{lll}
&2013&2012\
\text { Net Income } & \$ 90 & \$ 80 \
\text { Earnings Per Share } & \$ .45 & \$ .40 \
\text { Annual Common Dividends Per Share } & \$ .40 & \$ .20 \
\text { Closing Market Price Common Stock, } 12 / 31 & \$ 9.00 & \$ 6.00
\end{array}$ What is the dividend-payout for Montreal Electronics in 2013? Has the dividend-payout increased or decreased since 2012?
A)100%,increased
B)89%,decreased
C)89%,increased
D)50%,increased
E)50%,decreased

Question

Quizplus · Accepted Answer

Dividend-payout ratio = (Total Dividends/Net Income) x 100%
For 2013, Total Dividends = Annual Common Dividends Per Share x Number of shares outstanding
= $0.40 x (Net Income/Earnings Per Share) 
= $0.40 x (90/0.45) = $80
Dividend-payout ratio = (80/90) x 100% = 89%, which is an increase from 2012's dividend-payout ratio of (0.20/0.40) x 100% = 50%. Therefore, the correct answer is C.

Montreal Electronics Has the Following Data Available What Is the Dividend-Payout for Montreal Electronics in 2013? Has