The DuPont Method Breaks Residual Income into Profit Margin and Investment

question 64

True/False

The DuPont method breaks residual income into profit margin and investment turnover.

---

Definitions:

Residual Dividend Policy

A strategy whereby companies pay dividends from the residual or leftover equity only after all project capital needs are met.

Dividend Payout Ratio

The fraction of net income a firm pays to its shareholders in dividends, expressed as a percentage of the company's total net income.

Capital Budgeting

The process of evaluating and selecting long-term investments that are consistent with the firm's goal of wealth maximization.

Record Date

The date set by a company on which you must be on the company's books as a shareholder to receive a declared dividend or participate in corporate actions.