If a Firm Uses the Residual Dividend Model to Set

question 63

True/False

If a firm uses the residual dividend model to set dividend policy,then dividends are determined as a residual after providing for the equity required to fund the capital budget.Under this model,the higher the firm's debt ratio,the lower its payout ratio will be,other things held constant.

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Definitions:

Frederick Taylor

An American mechanical engineer who sought to improve industrial efficiency and is considered the father of scientific management, proposing that by optimizing and simplifying jobs, productivity would increase.

Scientific Management

A theory in management that analyzes and synthesizes workflows to improve economic efficiency, especially labor productivity.

Worker Productivity

The measure of the efficiency of a worker or group of workers in converting inputs into useful outputs.

Telomeres

The area at the tips of each chromosome that is reduced to a tiny amount as time passes. By the end of life, the telomeres are very short.