Which of the Following Statements Is FALSE

question 53

Multiple Choice

Which of the following statements is FALSE?

• A)A common approximation is to assume that in the long run,dividends will grow at a constant rate.
• B)The dividend each year is the firm's earnings per share (EPS)multiplied by its dividend payout rate.
• C)There is a tremendous amount of uncertainty associated with any forecast of a firm's future dividends.
• D)During periods of high growth,it is not unusual for firms to pay out 100% of their earnings to shareholders in the form of dividends.

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Definitions:

Return on Total Assets

A financial ratio that measures a company's profitability relative to its total assets, indicating how efficiently it uses those assets to generate profit.

Net Income

The total earnings of a company after subtracting all expenses from revenue.

Interest Expense

The cost incurred by an entity for borrowed funds, represented as the interest payable on any type of debt.

Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year relative to its stock price.