Lithion, Co

question 79

Multiple Choice

Lithion, Co. has a policy of returning a minimum of 25 percent of earnings to shareholders every year through dividend issues and open-market stock repurchases. In each quarter this year, the company earned $0.20 per share. In each of the first three quarters, the company paid a regular cash dividend of $0.05 per share. What combination of dividends could the company's board approve to meet their target payout percentage?

• A) A regular cash dividend of $0.05
• B) A regular cash dividend of $0.05 per share and an extra dividend of 0.05 per share
• C) A regular cash dividend of $0.05 per share and an extra dividend of $0.10 per share
• D) A regular cash dividend of $0.05 per share and an extra dividend of $0.20 per share

Analyze and calculate the current ratio.

Compute and understand the significance of accounts receivable turnover.

Calculate and interpret the inventory turnover.

Understand the concept and calculation of the operating cycle.

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Definitions:

Competitive Industry

An industry characterized by many firms offering similar or slightly differentiated products, leading to a high degree of competition and typically lower prices.

Increasing-cost Industry

An industry in which the costs of production increase as the industry expands, often due to limitations in resources or factors of production.

Long-run Supply Curve

A graphical representation showing the relationship between price and quantity supplied over a longer period, when all inputs can be varied.