The board of Kopi Industries is considering a new dividend policy that would set dividends at 55% of earnings. The recent past has witnessed earnings per share (EPS) and dividends paid per share as follows: Based on Kopi's historical dividend payout ratio, discuss whether a constant payout ratio of 55% would be suitable for the firm.

year EPS Dividend/share

2016 $1.45 $0.74 2017 $1.62 $0.93 2018 $1.70 $0.95

The dividend payout ratio in 2016 is ____ %. (Round to two decimal places.)

The dividend payout ratio in 2017 is ____ %. (Round to two decimal places.)

The dividend payout ratio in 2018 is ___ %.(Round to two decimal places.)

The dividend payout ratio in 2019 is ___ %(Round to two decimal places.)

Based on Kopi's historical dividend payout ratio and earnings history evidenced by EPS, would a constant payout ratio of 55%

be suitable for the firm?

Yes, because earnings appear to be growing and the average payout percentage has generally been close to 55%.

No, because Kopi Industry failed to pay out at least 55 of its earnings in two of the past four years.