An Increase in Which of the Following Will Increase Net

question 20

Multiple Choice

An increase in which of the following will increase net income?

• A)fixed costs
• B)depreciation
• C)marginal tax rate
• D)revenue
• E)dividends

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Definitions:

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without increasing its leverage or equity.

Dividend Payout Ratio

The fraction of net earnings a firm pays out to its shareholders in dividends, indicating how much money a company returns to shareholders versus reinvesting.

Financial Statement

An official documentation detailing the fiscal transactions and status of a company, individual, or another entity.

Retention Ratio

The portion of net income that is retained by a corporation rather than distributed to its shareholders as dividends.