Which of the Following Would Be Most Likely to Lead

question 7

Multiple Choice

Which of the following would be most likely to lead to a decrease in a firm's dividend payout ratio?

• A) Its access to the capital markets increases.
• B) Its R&D efforts pay off, and it now has more high-return investment opportunities.
• C) Its accounts receivable decrease due to a change in its credit policy.
• D) Its stock price has increased over the last year by a greater percentage than the increase in the broad stock market averages.
• E) Its earnings become more stable.

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Definitions:

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of a business.

Current Liabilities

Obligations that a company is expected to pay within one year or within its normal operating cycle, whichever is longer, including accounts payable, short-term loans, and taxes payable.

Noncurrent Liabilities

Obligations of a company not due for settlement within the next 12 months, such as long-term loans, bond payables, and lease liabilities.

Probable Future Payment

An expected financial obligation or expense, often projected based on current contracts, agreements, or identified liabilities.