Rio Imports
Information from the Financial Statements Is Provided in the Following

question 111

Multiple Choice

Rio Imports
Information from the financial statements is provided in the following table:
$\begin{array}{lrr}&\text { Year } 2&\text { Year } 1\\\text { Current liabilities } & \$ 460,000 & \$ 320,000 \\\text { Long-term liabilities } & 240,000 & 640,000 \\\text { Shareholders' equity } & 840,000 & 1,080,000 \\\text { Net cash flows from operating activities } & 160,000 & 102,000 \\\text { Interest and principal payments } & 24,000 & 16,000 \\\text { Net sales } & 950,000 & 900,000 \\\text { Net income } & 180,000 & 144,000 \\\text { Interest expense } & 17,000 & 23,000 \\\text { Income taxes } & 32,000 & 29,000 \\\text { Dividends paid to common shareholders } & 30,000 & 60,000\end{array}$
-Refer to Rio Imports.What is the dividend payout ratio for Year 2?

• A) 16.7%
• B) 18.5%
• C) 25.0%
• D) 27.8%

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Definitions:

Reaction Formation

A psychological defense mechanism where an individual behaves in a way that is directly opposite to their true feelings or impulses.

College Student

An individual enrolled in an institution of higher education to pursue a degree or certificate.

Phallic Stage

A stage in Freudian psychosexual development, occurring from roughly ages 3 to 6, where the libido's focus is on the genital area and themes of difference and identification are explored.

Castrated

The action or practice of removing the testicles of a male animal or human, often leading to sterility and a decrease in certain hormone levels.