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Review the income statement of DEF Corp. for the fiscal year ending December 31, 2023, to evaluate its Earnings Per Share (EPS) and Dividend Payout

Review the income statement of DEF Corp. for the fiscal year ending December 31, 2023, to evaluate its Earnings Per Share (EPS) and Dividend Payout Ratio.

DEF Corp. Income StatementYear Ended December 31, 2023
Revenue
Sales Revenue$1,500,000
Service Revenue$250,000
Total Revenue$1,750,000
Expenses
Cost of Goods Sold$700,000
Operating Expenses$400,000
Depreciation Expense$50,000
Interest Expense$30,000
Income Tax Expense$100,000
Total Expenses$1,280,000
Net Income$470,000
Preferred Dividends$20,000
Net Income Available to Common Shareholders$450,000
Weighted Average Shares Outstanding100,000
Dividends Paid to Common Shareholders$100,000

Questions:

  1. Calculate the Earnings Per Share (EPS) and explain its importance in evaluating the company's profitability from the perspective of common shareholders.
  2. Determine the Dividend Payout Ratio and discuss its significance in understanding the company's dividend policy and retention of earnings for growth.

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