Bowles Sporting Inc. is prepared to report the following income statement (shown in thousands of dollars) for the year 2009. Sales $15,200 Operating costs including depreciation (11,900) EBIT $ 3,300 Interest (300) EBT $ 3,000 Таxes (40%) (1,200) Net income $ 1,800 Prior to reporting this income statement, the company wants to determine its annual dividend. The company has 500,000 shares of stock outstanding, and its stock trades at $48 per share. a. The company had a 40% dividend payout ratio in 2008. If Bowles wants to maintain this payout ratio in 2009, what will be its per-share dividend in 2009? b. If the company maintains this 40% payout ratio, what will be the current dividend yield on the company's stock? c. The company reported net income of $1.5 million in 2008. Assume that the number of shares outstanding has remained constant. What was the company's per-share dividend in 2008? d. As an alternative to maintaining the same dividend payout ratio, Bowles is considering maintaining the same per-share dividend in 2009 that it paid in 2008. If it chooses this policy, what will be the company’s dividend payout ratio in 2009?
Bowles Sporting Inc. is prepared to report the following income statement (shown in thousands of dollars) for the year 2009.
Sales $15,200
Operating costs including depreciation (11,900)
EBIT $ 3,300
Interest (300)
EBT $ 3,000
Taxes (40%) (1,200)
Net income $ 1,800
Prior to reporting this income statement, the company wants to determine its annual dividend. The company has 500,000 shares of stock outstanding, and its stock trades at $48 per share.
a. The company had a 40% dividend payout ratio in 2008. If Bowles wants to maintain this payout ratio in 2009, what will be its per-share dividend in 2009?
b. If the company maintains this 40% payout ratio, what will be the current dividend yield on the company’s stock?
c. The company reported net income of $1.5 million in 2008. Assume that the number of shares outstanding has remained constant. What was the company’s per-share dividend in 2008?
d. As an alternative to maintaining the same dividend payout ratio, Bowles is considering maintaining the same per-share dividend in 2009 that it paid in 2008. If it chooses this policy, what will be the company’s dividend payout ratio in 2009?
Trending now
This is a popular solution!
Learn your way
Includes step-by-step video
Step by step
Solved in 7 steps with 4 images
