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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 Statement | Year 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 Outstanding | 100,000 |
Dividends Paid to Common Shareholders | $100,000 |
Questions:
- Calculate the Earnings Per Share (EPS) and explain its importance in evaluating the company's profitability from the perspective of common shareholders.
- 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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