Exercise 11-11 The following financial information is available for Ayayai Corpo

Question

Exercise 11-11 The following financial information is available for Ayayai Corporation. (in millions) Average common stockholders' equity Dividends declared for common stockholders Dividends declared for preferred stockholders Net income 2017 2016 $2,520 $2,570 600 35 545 300 35 505 Calculate the payout ratio and return on common stockholders' equity ratio for 2017 and 2016. (R decimal place, eg. 12.5%) 2017 2016 Payout ratio Return on common stockholders' equity Click if you would like to Show Work for this question: Open Show Work LINK TO TEXT VIDEO: SIMILAR EXERCISE Question Attempts: 0 of 3 usedSAVE FOR LATE

Explanation / Answer

Payout ratio

= Dividend per share / Earnings per share

OR

= Total dividend declared / Total net income available to equity

= Total dividend declared / (Net income – Preference dividend)

2016 =600 / (545 – 35)

2016 = 117.65%

2017 = 300 / (505 – 35)

2017 = 63.83%

Return on common stockholder’s equity

= (Net income – Preference dividend) / Average common stockholder’s equity     

2016 = (545 – 35) / 2,570

2016 = 19.84%

2017 = (505 – 35) / 2,520

2017 = 18.65%

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.