Suppose a Firm Pays Total Dividends of $250,000 Out of Net

question 12

Multiple Choice

Suppose a firm pays total dividends of $250,000 out of net income of $2 million. What would the firm's payout ratio be?

• A) 0.125
• B) 0.25
• C) 1.25
• D) 8.00

---

Definitions:

Completion Percentage

In project management and accounting, it refers to the ratio of work completed to the total scope of work, often used for progress billing and revenue recognition.

Equivalent Units

A concept in cost accounting used to convert partially completed goods into an equivalent number of fully completed units for inventory accounting purposes.

Conversion Costs

The combined costs of direct labor and overhead required to transform raw materials into finished goods.

First-In, First-Out

An inventory valuation method where the oldest inventory items are recorded as sold first.