Question - Residual Dividend Policy Worthington Corporation has declared an annual dividend of $0.90 per share. For the year just ended, earnings were $6.50 per share.
a. What is Worthington's payout ratio?
b. Suppose Worthington has 6.3 million shares outstanding. Borrowing for the coming year is planned at $16 million. What are planned investment outlays assuming a residual dividend policy (see Concept Question 3)? What target capital structure is implicit in these calculations?