Home Depot, Inc. 's income statements for 2011, 2012, and 2013 show basic earnings per share of

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Home Depot, Inc. 's income statements for 2011, 2012, and 2013 show basic earnings per share of $2.03, $2.49, and $3.03, respectively. Diluted earnings per share figures are slightly lower than these numbers, indicating the impact of potential capital stock activity that could reduce earnings per share for current stockholders.
The company paid cash dividends of $0.945 per share in 2011, $1.04 per share in 2012, and $1.16 per share in 2013.
a. Why do you think Home Depot is paying out only about 38 percent to 47 percent of its net income to stockholders in the form of cash dividends?
b. If you were an investor in Home Depot's stock, would you be unhappy because your dividends represented such a small percentage of the company's net income?
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Financial and Managerial Accounting the basis for business decisions

ISBN: 978-0078025778

17th edition

Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello

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