A fiRm That Follows a Cyclical Dividend Policy Will __________________

question 318

Multiple Choice

A firm that follows a cyclical dividend policy will __________________.

• A) Establish and attempt to maintain a stable dividend payment.
• B) Pay dividends on a residual basis.
• C) Establish and attempt to maintain a target debt/equity ratio.
• D) Make more special dividend payments than firms that follow a stable dividend payout.
• E) Pay dividends that vary according to income.

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Definitions:

Generally Accepted Accounting Principles (GAAP)

A collection of commonly-followed accounting rules and standards for financial reporting within the United States.

Reported Profit

The profit figure announced by a company, typically found in its financial statements, after accounting for all expenses.

Accrual Accounting

An accounting method where revenue and expenses are recorded when they are earned or incurred, respectively, regardless of when the cash is actually exchanged.

Operating Performance

A measure of a firm's efficiency in managing its core business operations, often evaluated using metrics such as operating margin and revenue growth.