A Payout Ratio of 35 Percent for a Company Indicates

question 115

Multiple Choice

A payout ratio of 35 percent for a company indicates that:

• A)35 percent of dividends are plowed back for growth.
• B)65 percent of dividends are plowed back for growth.
• C)65 percent of earnings are paid out as dividends.
• D)35 percent of earnings are paid out as dividends.

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Definitions:

Dividend Revenue

Income earned from owning shares in a company, typically paid out of the company's profits.

Equity Method

An accounting technique used when a company holds significant influence over another company but does not have full control, involving recording investments at original cost and adjusting for the share of profit or loss.

Stock Investments

Financial assets representing ownership in a company or corporation, typically bought and sold on stock exchanges.

Investee

A company or entity in which an investor holds a minority interest, typically through the ownership of shares.