High Tower Pharmacy Pays a Fixed Percentage of Its Net

question 46

Multiple Choice

High Tower Pharmacy pays a fixed percentage of its net income out to its shareholders in the form of annual dividends.Given this,the percentage shown on a common-size income statement for the dividend account will:

• A)remain constant over time
• B)be equal to the dividend amount divided by the net income
• C)vary in direct relation to the net profit percentage
• D)vary in direct relation to changes in the sales level
• E)vary but not in direct relation to any other variable

---

Definitions:

Foreign Investors

Individuals or entities that invest capital in business ventures in a country other than their own, seeking to earn a return on their investment.

Full Employment GDP

The output level (Gross Domestic Product) achieved by an economy when all available resources are employed, but not beyond sustainable capacity.

Recessionary Gap

A situation where real GDP is less than potential GDP, indicating underutilized economic resources.

Social Security Surplus

The excess funds collected through Social Security taxes over the amounts paid out as benefits.