Which Statement About Retained Profits and Dividends Is True

question 41

Multiple Choice

Which statement about retained profits and dividends is true?

• A)Dividends and retained profits are two sides of the same coin.
• B)In Australia, industrial companies, on average, pay out about 30% of their earnings as dividends.
• C)On average, dividends are a relatively small component of return on shares compared to capital gains.
• D)All of the statements are true.

---

Definitions:

Discontinued Operations

Components of a business that have been sold or discontinued, reported separately from continuing operations in financial statements.

Asset Turnover Ratio

A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue.

Return On Total Assets

A financial ratio that measures the efficiency of a company's assets in generating profit, calculated by dividing net income by total assets.

Earnings Per Share

A financial metric that measures the profitability of a company on a per-share basis, calculated by dividing the company's net income by its total number of outstanding shares.