Question
Dividend Policy A company has decided to distribute dividends in the following manner: Total earnings: $500,000 Retained earnings: $200,000 Number of shares: 50,000 Requirements: (a)
Dividend Policy
A company has decided to distribute dividends in the following manner:
- Total earnings: $500,000
- Retained earnings: $200,000
- Number of shares: 50,000
Requirements: (a) Calculate the Dividend Payout Ratio. (b) Calculate the Dividend per Share (DPS). (c) Calculate the Retention Ratio. (d) If the company decides to increase the dividend payout ratio to 70%, what will be the new DPS? (e) Discuss the potential impacts on the company’s stock price with the increased dividend payout ratio.
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
6th Canadian edition
1118644948, 978-1118805084, 1118805089, 978-1118644942
