For a Firm with a Constant Payout Ratio,the Dividend Growth

question 27

Multiple Choice

For a firm with a constant payout ratio,the dividend growth rate can be estimated as:

• A)Payout ratio × Return on equity.
• B)Return on assets × Retention ratio.
• C)Return on equity × (1 + Retention ratio).
• D)Payout ratio × Return on assets.
• E)Return on retained earnings × Retention ratio.

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Definitions:

Book Value

The net value of a company's assets minus its liabilities, often used to estimate the company's value if it were to be liquidated.

Accounts Receivable

Money owed to a company by its debtors for goods or services that have been delivered or used, but not yet paid for.

Source of Cash

Various origins from where a company or individual receives cash, including operations, financing activities, investments, and external funding.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.