Concept #1: Ratios: Payout Ratio
Practice: ConsistoCo has a policy to maintain a constant payout ratio from year to year. During the previous fiscal year, net income totaled $1,200,000 and ConsistoCo paid $240,000 in dividends. This year, due to the settlement of a lawsuit, the company had net income of $700,000. What amount of dividends would investors expect ConsistoCo to declare this year?
Practice: Dive Company maintains a policy to have a consistent payout ratio from year to year. Selected financial information for the company is as follows:
What amount of dividends would the company pay during the current year?