The following numbers are for three different companies:
|
A |
B |
C |
|
|
Cash . |
$ 50 |
$ 200 |
$ 400 |
|
Retained earnings |
900 |
800 |
3,500 |
|
Cash dividends |
80 |
0 |
500 |
|
Paid in capital |
1,000 |
2,500 |
2,000 |
|
Total liabilities |
600 |
300 |
1,400 |
|
Sales |
5,000 |
10,000 |
4,000 |
|
Net income . |
200 |
500 |
800 |
1. For each company, compute the dividend payout ratio.
2. Interpretive Question: Which of the three companies is most likely to be a high growth Internet company? Which is most likely to be an old, stable company? Explain.