In Order for a Firm to Have an Effective Incentive

question 97

True/False

In order for a firm to have an effective incentive plan, there should be a clear relationship between employee effort and quantity or quality of output.

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Definitions:

Dividend Payout Ratio

The percentage of earnings a company distributes to its shareholders in the form of dividends, serving as a measure of how much profit is returned to shareholders versus retained for growth.

Finance Perspective

An approach or viewpoint focusing on the management of assets, liabilities, revenue, and investments within the framework of financial theory and practice.

Sustainable Rates Growth

The peak growth rate a firm can achieve in its earnings without resorting to more debt financing or selling additional shares.

External Funding Needs

The amount of money a company needs to raise from outside sources to finance its operations or growth plans.