27 Residual Dividend Policy Worthington AG has declared an annual dividend of 1.50 Swiss francs (SFr) per
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27 Residual Dividend Policy Worthington AG has declared an annual dividend of 1.50 Swiss francs
(SFr) per share. For the year just ended, earnings were SFr14 per share.
(a) What is Worthington’s payout ratio?
(b) Suppose Worthington has 12 million shares outstanding. Borrowing for the coming year is planned at SFr25 million. What are planned investment outlays assuming a residual dividend policy? (See problem 11.)
What target capital structure is implicit in these calculations?
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