Which of the Following Is the Best Definition of the Target

question 247

Multiple Choice

Which of the following is the best definition of the target payout ratio?

• A) Stocks attract particular groups based on dividend yield and the resulting tax effects.
• B) Price range between highest and lowest prices at which a stock is traded.
• C) A firm's long-term desired dividend-to-earnings ratio.
• D) Common stock on which dividends and capital gains are repackaged and sold separately.
• E) An increase in a firm's shares outstanding without any change in owner's equity.

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Definitions:

Cumulative Effect

The total impact of a change in accounting principle or correction of an error reported in a single period's financial statements.

Change In Accounting Principle

An adjustment made to the accounting methods used by a company, often requiring retrospective application to prior period financial statements.

Net Income

The remaining earnings of a firm once subtracting every expense and tax from its total income.

Extraordinary Item

Events or transactions that are distinct from the ordinary activities of a company, which are unusual in nature and infrequent in occurrence.