The Payout Ratio Is Calculated by Dividing the Cash Dividends

question 16

True/False

The payout ratio is calculated by dividing the cash dividends paid on common shares by retained earnings.

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Definitions:

Financial Ratios

Metrics derived from financial statements that are used by analysts to evaluate a company's financial health or performance.

Yield To Maturity

The total return anticipated on a bond if held until it matures, including all payments of principal and interest, measured as an annual rate.

Noncallable Bonds

Bonds that cannot be redeemed by the issuer before their maturity date, providing investors with certainty that they will receive interest payments for the life of the bond.

Par Value

The stated value of a bond, stock share, or coupon as declared by the issuer.