Which of the Following Factors Would Most Likely Be Present

question 139

Multiple Choice

Which of the following factors would most likely be present if a company increases its dividend payout ratio significantly?

• A)a high debt/equity ratio (i.e.,use of a large amount of financial leverage)
• B)a quick ratio that is significantly below the industry average
• C)current shareholders cannot participate in a new offering and desire to maintain ownership control
• D)the variability of expected future earnings decreases

Recognize the limitations and considerations of internal control systems.

Understand the role and impact of technology in enhancing internal control.

Distinguish between suitable and unsuitable practices in internal control.

Grasp the concept of liquidity and its relevance to a company's financial health.

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Definitions:

Direct Method

A way to present the cash flow statement where actual cash flows from operating activities are disclosed, contrasting with the indirect method.

Statement of Cash Flows

A financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents.

Depreciation Expense

The allocated cost of a tangible asset over its useful life, reflecting wear and tear, obsolescence, or decline in value.

Statement of Cash Flows

A report detailing how shifts in income and balance sheet figures influence the holdings of cash and its equivalents.