Answer :
Final answer:
The payout ratio for 2025 is 8.25% and for 2024 is 7.60%.
Explanation:
To calculate the payout ratio for 2025 and 2024, we need to divide the cash dividends paid on common stock by the net income for each year.
For 2025:
Using the formula:
Payout ratio = (Cash dividends paid on common stock / Net income) * 100
Substituting the values:
Payout ratio for 2025 = ($231 / $2,800) * 100 = 8.25%
For 2024:
Using the formula:
Payout ratio = (Cash dividends paid on common stock / Net income) * 100
Substituting the values:
Payout ratio for 2024 = ($228 / $3,000) * 100 = 7.60%
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