The dividend payout ratio is typically defined as the percentage of the firm\'s

Question

The dividend payout ratio is typically defined as the percentage of the firm's residual cash flow (what's left over after all claimants have been paid) that flows to the shareholders in the form of a dividend.

In many cases the quoted dividend is the annual dividend, although it is typically paid out in quarterly chunks.

Suppose that Samsonite Inc. has a payout ratio of 25%.
What is its annual dividend if its residual cash flow is $2.50 per share? $
What is its quarterly dividend? $

Place your answers in dollars and cents without the dollar sign

Explanation / Answer

Residual cash flow is $2.50 per share.

Dividend payout ratio = 25%

Annual dividend = $2.5 * 0.25 = $0.625 per share.

Quarterly dividend = $0.625/4 = $0.15625 per share

Quarterly dividend is calculated by dividing the annual dividend into four parts, which could be paid in four quarters.

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.