Determine the dividend payout ratio for the common stock

Assignment Help Financial Accounting

Reference no: EM133378920

Question: Payout Ratio and Book Value per Share

Divac Company has developed a statement of stockholders' equity for the year 2017 as follows:

	Preferred Stock	Paid-In Capital- Preferred	Common Stock	Paid-In Capital- Common	Retained Earnings
Balance, Jan. 1	$100,000	$50,000	$400,000	$40,000	$200,000
Stock issued			100,000	10,000
Net income					62,000
Cash dividend					-61,000
Stock dividend	10,000	5,000			-15,000
Balance, Dec. 31	$110,000	$55,000	$500,000	$50,000	$186,000

Divac's preferred stock is $100 par, 8% stock. If the stock is liquidated or redeemed, stockholders are entitled to $120 per share. There are no dividends in arrears on the stock. The common stock has a par value of $5 per share. Assume that the common stockholders have a right to the total net income of $62,000.

Required:

1. Determine the dividend payout ratio for the common stock. Round the payout ratio to four decimal places, but enter as a percentage to two decimal places. For example, .34678 rounds to .3468 and would be entered as 34.68, indicating 34.68%.

2. Determine the book value per share of Divac's common stock. Round the book value per share to two decimals.

Reference no: EM133378920

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