Asked by Jason Rosete on Jun 29, 2024
Verified
Recher Corporation's common stock has a par value of $3 per share and has been stable at a total value of $270,000 on the company's balance sheet for several years. The total stockholders' equity at the end of this year was $1,023,000 and at the beginning of the year was $1,010,000. Net income for the year was $17,500. Dividends on common stock during the year totaled $4,500. The market price of common stock at the end of the year was $3.76 per share.The company's dividend yield ratio is closest to: (Round your intermediate calculations to 2 decimal places.)
A) 1.7%
B) 17.1%
C) 1.3%
D) 26.3%
Dividend Yield Ratio
A financial ratio that shows how much a company pays out in dividends each year relative to its share price.
Par Value
A nominal value assigned to a security or stock as stated in the corporate charter.
- Understand the significance and computation of dividend-related ratios such as dividend payout ratio and dividend yield ratio.
Verified Answer
CM
Celeste MartinezJul 05, 2024
Final Answer :
C
Explanation :
The dividend yield ratio is calculated as (Annual Dividends per Share / Market Price per Share) * 100. Given that dividends totaled $4,500 and the market price per share is $3.76 at the end of the year, we first need to find the number of shares. The total value of common stock is $270,000 with a par value of $3 per share, so the number of shares is $270,000 / $3 = 90,000 shares. The annual dividends per share is $4,500 / 90,000 = $0.05. Therefore, the dividend yield ratio is ($0.05 / $3.76) * 100 = 1.33%, which rounds to approximately 1.3%.
Learning Objectives
- Understand the significance and computation of dividend-related ratios such as dividend payout ratio and dividend yield ratio.
Related questions
Sperle Corporation Has Provided the Following Data Concerning Its Stockholders ...
Groeneweg Corporation Has Provided the Following Data: Dividends on ...
Uhri Corporation Has Provided the Following Data: Dividends on ...
Kovack Corporation's Net Operating Income in Year 2 Was $66,571 ...
The Following Data Were Reported for Favre Company ...