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

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Definitions:

Goodwill

An intangible asset representing the excess value paid for a company over its book value, reflecting factors like brand reputation or customer relations.

Classified Balance Sheet

A balance sheet that organizes a company's assets, liabilities, and equity into subcategories for more detailed and understandable financial analysis.

Adjusted Trial Balance

A financial statement that lists all account balances in the general ledger after adjustments are made, ensuring the total credits equal total debits.

Statement of Cash Flows

The statement of cash flows is a financial report that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.