What Does Dividend Smoothing Refers To

question 22

Multiple Choice

What does dividend smoothing refers to?

• A) Adopting a consistent, rising dividend over time.
• B) Declaring an EPS that does not change much in value from year to year.
• C) Offsetting declines in income with higher dividend payouts.
• D) Providing a DRIP (dividend reinvestment programs) to absorb unwanted cash payouts.
• E) Ensuring that the dividend yield ratio is the same from year to year.

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Definitions:

Net Profit Margin Ratio

A profitability metric that shows the percentage of revenue that remains as net income after all expenses have been deducted.

Net Income

The total earnings of a company after accounting for all expenses and taxes, reflecting the company's profitability.

Operating Revenues

Income generated from the core business activities of a company.

Gross Profit

The earnings a company retains after subtracting the expenses incurred in the production and sale of its goods, or the expenses related to delivering its services.