A Firm Increases Its Dividend Plowback Ratio

question 16

Multiple Choice

A firm increases its dividend plowback ratio. All else equal you know that ________.

• A)earnings growth will increase and the share's P/E will increase
• B)earnings growth will decrease and the share's P/E will increase
• C)earnings growth will increase and the share's P/E will decrease
• D)earnings growth will increase and the share's P/E may or may not increase

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Definitions:

Salaries And Wages Expense

The total amount spent by a business on employee compensation.

Accounting Equation

The accounting equation is a fundamental principle of financial accounting that states that assets equal liabilities plus equity, providing the foundation for double-entry bookkeeping.

Transaction Explanation

A description or rationale provided for each transaction within an accounting system, aiding in understanding and verifying the nature of the transaction.

Income Statement

Also known as profit and loss statement, it details a company’s financial performance, including sales, expenses, and profits over a period.