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.The company's dividend payout ratio for Year 2 is closest to:
A) 0.8%
B) 1.8%
C) 16.3%
D) 11.4%

Question

Quizplus · Accepted Answer

Earnings per share = Net Income ÷ Average number of common shares outstanding*
= $21,500 ÷ 50,000 shares = $0.43 per share (rounded)
*Number of common shares outstanding = Common stock ÷ Par value
= $200,000 ÷ $4 per share = 50,000 shares
Dividend payout ratio = Dividends per share* ÷ Earnings per share
= $0.07 ÷ $0.43 = 16.3% (rounded)
*Dividends per share = Common dividends ÷ Common shares (see above)
= $3,500 ÷ 50,000 shares = $0.07 per share (rounded)

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