Principles of Managerial Finance
Principles of Managerial Finance
17th Edition
ISBN: 9781323419656
Author: Gitman
Publisher: PEARSON
Question
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Chapter 14, Problem 14.6P

a)

Summary Introduction

To determine: The payout ratio of every year on the basis of regular dividend and cited Earnings per share (EPS).

Introduction:

Dividend is a sum of money paid to the shareholders of the company. It is distributed among the investors from the portion of company’s earnings. It is paid by the company to the shareholders either in the form of cash or stock.

The payout ratio is that portion of company’s earnings that paid as the dividend to the shareholders of the company. A high ratio means that the company distributed more earnings to the shareholders and low ratio means that the company uses its earnings to reinvest in the company.

b)

Summary Introduction

To determine: The difference between the regular dividend and 25% payout for each year.

c)

Summary Introduction

To discuss: The regular and extra dividend in the years when an extra dividend would be paid and the usage of extra dividend which are not paid.

d)

Summary Introduction

To discuss: The factor that is considered in making a revision to amount that is paid as a stable dividend and the amount to pay if the firm revises the regular dividend.

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Chapter 14 Solutions

Principles of Managerial Finance

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