Which of the Following Is Correct for a Firm with EPS

question 75

Multiple Choice

Which of the following is correct for a firm with EPS of $2 per share and a 40 percent payout ratio?

• A)40 percent of earnings will be plowed back into the firm
• B)Dividends will equal 60' per share
• C)Book value per share of equity will increase by $1.20
• D)Retained earnings will be unchanged

Understand the concept of comprehensive income and the items included in it.

Identify and explain the components and significance of discontinued operations in financial statements.

Understand and apply vertical analysis to income statement items for better financial insight.

Understand the impact of group norms and interpersonal relationships on workplace dynamics.

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Definitions:

Assets

Resources owned by a company or individual that have economic value and can provide future benefits.

Expense Recognition Principle

An accounting principle that directs the recognition of expenses in the same period as the related revenues.

Actual Cost

The actual expense incurred to acquire an asset or the expense incurred to produce goods or services, as opposed to budgeted or estimated costs.

Full Disclosure Principle

A financial reporting guideline requiring companies to disclose all relevant and necessary information in their financial statements and footnotes to help users make well-informed decisions.