Question

Brooks Sporting Inc. is prepared to report the following 2016 income statement (shown in thousands of dollars). Sales Operating costs including depreciation EBIT Interest EBT Taxes (40%) Net income $19700 15169 $4531 396 $4135 1654 $2481 Prior to reporting this income statement, the company wants to determine its annual dividend. The company has 460000 shares of stock outstanding, and its common stock trades at $55 per share. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questions below. Open spreadsheet a. The company had a 35% dividend payout ratio in 2015. If Brooks wants to maintain this payout ratio in 2016, what will be its per-share dividend in 2016? Round your answer to the nearest cent.

Answer 1

Net Income	2481000
a.Payout Ratio = 35%	868350
Number of shares	460000
Per share dividend	1.89
b. Dividend yield = Expected Dividend/Current price	3.43%
C.Per share Dividend in 2015	1.673913043
d.Payout ratio	31.04%
e.Same per share dividend
As it is lesser and will lead to higher retained earnings

2481000 1 Net Income 2 3 a.Payout Ratio = 35% 4 Number of shares 5 Per share dividend =B1*35% 460000 =B3/B4 6 =B5/55 =2200000*35%/460000 7 b. Dividend yield = Expected Dividend/Current price 8 9 C.Per share Dividend in 2015 10 11 d.Payout ratio 12 13 e.Same per share dividend 14 As it is lesser and will lead to higher retained earnings =B9*460000/B1