Quantem Aviation earned $10 million dollars last year and retained $6 million. What is the payout...

Question:

Quantem Aviation earned $10 million dollars last year and retained $6 million. What is the payout ratio?

Dividend Payout Ratio:

The dividend ratios help us to analyze the companies' policy relating to rewarding the shareholders by way of cash dividends and the amount retained for internal accrual. The dividend payout ratio is the percentage of net income distributed to shareholders.

Answer and Explanation:

The dividend payout ratios indicate the proportion of profit after tax that has been used to cash dividends to the shareholders

  • The Net income earned is $10 million
  • The amount retained from the net income is $6 million

The dividend paid is calculated below

Cash Dividend = Net income - Retained amount
=$10 - $6
=$4 million

The dividend payout ratio is calculated below

Dividend paid / Net Income
=4 / 10
=0.40 or 40%

The dividend payout ratio is 40%


Learn more about this topic:

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