Answer:
a) Payout ratio for common stock:
= 0.60 or 60% for 2017
= 0.98 or 98% for 2016
b) Return on Common Stockholders' Equity
2017 = 19.82%
2016 = 21.88%
Explanation:
a) Data and Calculations:
(in millions) 2017 2016
Average common stockholders’ equity $2,825 $2,925
Net income 605 685
Dividends declared for preferred stockholders 45 45
Net income available for common stockholders 560 640
Dividends declared for common stockholders 335 630
Payout ratio for common stock:
= Dividends per share/Earnings per share
Dividends / Earnings for common stockholders
= $335/$560 = 0.60 for 2017
= $630/$640 = 0.98 for 2016
Return on common stockholders' equity:
= Earnings after preferred stock/Common Stockholders' Equity
2017 = $560/$2,825
= 0.1982
= 19.82%
2016 = $640/$2,925
= 0.2188
= 21.88%
