Dividends on common stock during year 2 totaled 40 thousand

Question

Lundberg Corporation's most recent balance sheet and income statement appear below:

 

Statement of Financial Position December 31, Year 2 and Year 1 (in thousands of dollars)
	Year 2		Year 1
Asset:
Current assets:
Cash	$	180	$	190
Accounts receivable		290		300
Inventory		190		180
Prepaid expenses		15		15
Total current assets		675		685
Plant and equipment, net		952		932
Total assets	$	1,627	$	1,617
Liabilities and stockholders' equity:
Current liabilities:
Accounts payable	$	240	$	230
Accrued liabilities		130		130
Notes payable, short term		180		190
Total current liabilities		550		550
Bonds payable		270		320
Total liabilities		820		870
Stockholders' equity:
Preferred stock, $100 par value, 10%		280		280
Common stock, $1 par value		100		100
Additional paid-in capital--common stock		110		110
Retained earnings		317		265
Total stockholders' equity		807		755
Total liabilities and stockholders' equity	$	1,627	$	1,625

 

Income Statement For the Year Ended December 31, Year 2 (in thousands of dollars)
Sales (all on account)	$	1,490
Cost of goods sold		866
Gross margin		624
Selling and administrative expenses		406
Net operating income		218
Interest expense		47
Net income before taxes		171
Income taxes (30%)		51
Net income	$	120

Dividends on common stock during Year 2 totaled $40 thousand. The market price of common stock at the end of Year 2 was $9.34 per share.

Compute the dividend payout ratio for Year 2. (Do not round intermediate calculations. Round your answer to 1 decimal place. Omit the "%" sign in your response.)