Use the Information Below to Answer the Following Question(s)

question 140

Multiple Choice

Use the information below to answer the following question(s) .The top management at Munchie Company, a manufacturer of computer games, is attempting to recover from a flood, which destroyed some of its accounting records.The main computer system was also severely damaged.The following information was salvaged:

-What is the Alpha Division's return on sales?

• A)0.25
• B)0.42
• C)0.60
• D)0.75
• E)0.80

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Definitions:

Payout Ratio

The proportion of earnings paid out as dividends to shareholders, often expressed as a percentage.

Dividend Policies

The policies and guidelines a company follows in deciding how much of its earnings it will pay out to shareholders as dividends.

Bird-In-The Hand

A theory suggesting that investors prefer dividends from a stock to potential capital gains because of the immediate certainty of receiving payouts.

Dividend Reinvestment Plans

Programs that allow shareholders to automatically reinvest their cash dividends into additional shares of the issuing company.