Calculate payout ratio given the following information: cash dividends paid = $35,525; sales = $900,000; cost of goods sold = $625,000; selling and administrative expenses = $100,000; interest expense = $30,000; tax rate= 30%.

A) 70%
B) 30%
C) 50%
D) 35%
E) 65%

Question

Elizabeth Samura · Accepted Answer

Final Answer : D, Explanation :  Payout ratio = Cash dividends paid / Net incomeNet income = Sales - Cost of goods sold - Selling and administrative expenses - Interest expense - TaxesNet income = $900,000 - $625,000 - $100,000 - $30,000 - ($900,000 - $625,000 - $100,000) * 0.3Net income = $900,000 - $625,000 - $100,000 - $30,000 - $54,000Net income = $93,000Payout ratio = $35,525 / $93,000Payout ratio = 38.2%

Calculate payout ratio given the following information: cash dividends paid = $35,525; sales = $900,000; cost of goods sold = $625,000; selling and administrative expenses = $100,000; interest expense = $30,000; tax rate= 30%.

A) 70%
B) 30%
C) 50%
D) 35%
E) 65%

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Calculate payout ratio given the following information: cash dividends paid = $35,525; sales = $900,000; cost of goods sold = $625,000; selling and administrative expenses = $100,000; interest expense = $30,000; tax rate= 30%.A) 70%B) 30%C) 50%D) 35%E) 65%

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Learning Objectives

Learning Objectives

Related questions

Calculate payout ratio given the following information: cash dividends paid = $35,525; sales = $900,000; cost of goods sold = $625,000; selling and administrative expenses = $100,000; interest expense = $30,000; tax rate= 30%.

A) 70%
B) 30%
C) 50%
D) 35%
E) 65%