Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Brooks Sporting Inc. is prepared to report the following 2019 income statement (shown in thousands of dollars). Sales $16,800 Operating costs including depreciation 12,264 EBIT

Brooks Sporting Inc. is prepared to report the following 2019 income statement (shown in thousands of dollars).

Sales $16,800

Operating costs including depreciation 12,264

EBIT $4,536

Interest 264

EBT $4,272

Taxes (25%) 1,068

Net income $3,204

Prior to reporting this income statement, the company wants to determine its annual dividend. The company has 450,000 shares of common stock outstanding, and its stock trades at $43 per share.

A The company had a 30% dividend payout ratio in 2018. If Brooks wants to maintain this payout ratio in 2019, what will be its per-share dividend in 2019? Do not round intermediate calculations. Round your answer to the nearest cent.

B If the company maintains this 30% payout ratio, what will be the current dividend yield on the company's stock? Do not round intermediate calculations. Round your answer to two decimal places.

C The company reported net income of $3.1 million in 2018. Assume that the number of shares outstanding has remained constant. What was the company's per-share dividend in 2018? Do not round intermediate calculations. Round your answer to the nearest cent.

D As an alternative to maintaining the same dividend payout ratio, Brooks is considering maintaining the same per-share dividend in 2019 that it paid in 2018. If it chooses this policy, what will be the company's dividend payout ratio in 2019? Do not round intermediate calculations. Round your answer to two decimal places.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance Fundamentals For Nonprofits

Authors: Woods Bowman

1st Edition

1118004515, 9781118004517

More Books

Students also viewed these Finance questions

Question

describe the two basic forms of functional social support;

Answered: 1 week ago

Question

Do you believe that Matilda overreacted to James? Why or why not?

Answered: 1 week ago