Homework Answers
Answer
1.OPTION: C DIVIDEND PAYOUT RATIO
Dividend payout ratio represents the profitability to Stockholders
2. OPTION C 5%
Return on common Equity = (Net Income - Dividend on Preferred Stock) ÷ Average Common Stock Holders Equity
Here Net Income = $125,000 , Dividend on Prefferd Stock = 0
Average Common stock holders equity = ($24,30,000+$25,70,000)/2
= $ 25,00,000
ROCE = $ 125,000÷ $25,00,000
=0.05
=0.05×100
= 5%
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