Kovack Corporation's net operating income in Year 2 was $66,571, net income before taxes was $46,571, and the net income was $32,600. Total common stock was $120,000 at the end of both Year 2 and Year 1. The par value of common stock is $2 per share. The company's total stockholders' equity at the end of Year 2 amounted to $962,000 and at the end of Year 1 to $930,000. The company declared and paid $600 dividends on common stock. The market price per share was $4.37. The company's dividend yield ratio for Year 2 is closest to:

A) 0.2%
B) 1.3%
C) 1.9%
D) 0.5%

Question

ZaHere Ritman · Accepted Answer

Final Answer : A, Explanation :  The dividend yield ratio is calculated as (Dividends per share / Market price per share) * 100. With $600 total dividends and 60,000 shares (since $120,000 common stock at $2 par value per share), dividends per share is $0.01. Thus, the dividend yield ratio is ($0.01 / $4.37) * 100 = 0.23%, closest to 0.2%.

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