Financial Statements for Larned Company Appear Below:

Total Dividends During Year 2 Were

question 176

Multiple Choice

Financial statements for Larned Company appear below:



Shareholders' Equity:
$\begin{array}{|l|r|}\hline & \begin{array}{r}\text { Larned Company } \\\text { Income Statement }\\\text { For the Year Ended December 31, Year 2 }\\\text { (dollars in thousands) }\end{array} \\\hline \text { Sales (All on Account) } & \$ 2930 \\\hline \text { Costs of Goods Sold } & \$ 2050 \\\hline \text { Gross Margin } & \$ 880 \\\hline \text { Operating Expenses } & \$ 350 \\\hline \text { Net Operating Income } & \$ 530 \\\hline \text { Interest Expense } & \$ 40 \\\hline \text { Net Income before Taxes } & \$ 490 \\\hline \text { Income Taxes }(30 \%) & \$ 147 \\\hline \text { Net Income } & \$ 343 \\\hline\end{array}$
Total dividends during Year 2 were $\$ 263,000$ , of which $\$ 12,000$ were for preferred shares. The market price of a common share on December 31, Year 2 was $\$ 160$ .
-Larned Company's dividend payout ratio for Year 2 was closest to which of the following?

• A) 28.5%.
• B) 47.4%.
• C) 75.8%.
• D) 76.7%.

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Definitions:

Management Freedom

The extent to which managers have the autonomy to make decisions, innovate, and guide their teams without excessive constraints.

Benefits

Advantages or payments provided to employees in addition to their regular salaries, such as health insurance, pension plans, and paid vacation.

Costs

The amounts of money required for the production of goods or services, or the operation of a company or organization.

Formulate HR Policy

The process of developing guidelines and regulations for managing an organization’s human resources.