Multiple Choice
During the current year, PayCo declared and paid a cash dividend of \$600,000. The number of shares of common stock outstanding is 1,000,000. If the current market price of the stock is \$15, what is the dividend yield ratio?
14. Financial Statement Analysis
Ratios: Dividend Yield Ratio
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ABC Company's common stock currently has a market price of \$20, while total stockholders' equity has a book value of \$600,000 (60,000 shares outstanding). During the current year, ABC Company maintained a dividend yield ratio of 8%. What was the total amount of dividends paid to common stockholders?
A
\$24,000
B
\$48,000
C
\$72,000
D
\$96,000
Verified step by step guidance1
Identify the dividend yield ratio, which is given as 8%. This ratio represents the annual dividend per share divided by the market price per share.
Calculate the annual dividend per share using the formula: Dividend per Share = Dividend Yield Ratio × Market Price per Share. Here, the market price per share is \$20.
Determine the total number of shares outstanding, which is given as 60,000 shares.
Calculate the total amount of dividends paid by multiplying the annual dividend per share by the total number of shares outstanding.
Verify the calculated total dividends against the provided options to ensure the correct answer is selected.
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