Record amount in common stock dividends

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Reference no: EM131893890

Good old XYZ Corporation had sales this past year of $450,000. Their cost of goods sold came to $200,000. They eventually plan to expand their operation but due to the current economic situation they have decided to postpone any new investment in plant and equipment and therefore invested their extra cash in McDonald's stock. That turned out to be a fairly good move as they received this year a dividend check from Mc'Ds for $6,000. In order to keep their own stockholders happy, they increased their dividend payout ratio to 50% of their net profits. This resulted in XYZ paying a record amount in common stock dividends for the year: $22,500.

Reference no: EM131893890

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