Asked by Konner Powers on Apr 28, 2024
Verified
Kovack Corporation's net operating income in Year 2 was $66,571, net income before taxes was $46,571, and the net income was $32,600.Total common stock was $120,000 at the end of both Year 2 and Year 1.The par value of common stock is $2 per share.The company's total stockholders' equity at the end of Year 2 amounted to $962,000 and at the end of Year 1 to $930,000.The company declared and paid $600 dividends on common stock.The market price per share was $4.37.The company's dividend yield ratio for Year 2 is closest to:
A) 0.2%
B) 1.3%
C) 1.9%
D) 0.5%
Dividend Yield Ratio
A financial ratio that measures how much a company pays out in dividends each year relative to its stock price.
Net Operating Income
A financial metric that denotes a company’s income after subtracting operating expenses but before interest and taxes.
Total Common Stock
The aggregate value or amount of all shares of common stock issued by a company.
- Analyze a company's operating performance through net operating income, net income, and earnings per share calculations.
- Calculate and understand dividend ratios, including dividend yield and dividend payout ratios, to evaluate a company's dividend policy.
- Understand the significance of common stock metrics such as market price per share, book value per share, and price-earnings ratio.
Verified Answer
AW
Aidan WagnerApr 29, 2024
Final Answer :
A
Explanation :
Dividend yield ratio = Dividends per share* ÷ Market price per share
= $0.01 ÷ $4.37 = 0.23% (rounded)
*Dividends per share = Common dividends ÷ Common shares (see above)
= $600 ÷ 60,000 shares = $0.01 per share (rounded)
= $0.01 ÷ $4.37 = 0.23% (rounded)
*Dividends per share = Common dividends ÷ Common shares (see above)
= $600 ÷ 60,000 shares = $0.01 per share (rounded)
Learning Objectives
- Analyze a company's operating performance through net operating income, net income, and earnings per share calculations.
- Calculate and understand dividend ratios, including dividend yield and dividend payout ratios, to evaluate a company's dividend policy.
- Understand the significance of common stock metrics such as market price per share, book value per share, and price-earnings ratio.
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