Which of the Following Is Not a "Rule of Thumb

question 9

Multiple Choice

Which of the following is not a "rule of thumb" used by budget analysts in review of agency budgets?

• A) Cut departments with "bad" reputations.
• B) Compare proposed budget with prior year and current year budget and actual expenditures to identify areas which may be reduced without great trouble.
• C) Recommend repair and renovation rather than replacement of facilities.
• D) None of the above; all are "rules of thumb"

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Definitions:

Retained Earnings

Profits that a company chooses not to distribute as dividends but instead reinvests into the business or uses to pay off debt, reflecting the accumulated surplus from business operations.

Dividend Payout Ratio

The fraction of net earnings a firm pays to its shareholders as dividends, usually expressed as a percentage.

Profit Margin

A measure of profitability calculated as net income divided by revenue.

Equity Financing

The method of raising capital through the sale of shares in a company, giving investors ownership interests.