Which of the Following Will Lead to an Increase in Earnings

question 45

Multiple Choice

Which of the following will lead to an increase in earnings per share?

• A) an increase in the P/E ratio
• B) an increase in the dividend payout ratio
• C) an increase in return on equity if book value per share stays the same
• D) a decrease in the number of shares if return on equity stays the same

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Definitions:

Current Ratio

A financial ratio indicating how well a company can cover its short-term debts with assets that can be quickly converted into cash within a year.

Decimal Place

The position of a number to the right of the decimal point, used to represent fractions of a whole in decimal notation.

Horizontal Analysis

A financial analysis technique that compares historical financial data over a series of reporting periods to identify trends and growth patterns.

Vertical Analysis

A method of financial statement analysis in which each entry for each of the three major categories of accounts (assets, liabilities, and equities) in a balance sheet is represented as a proportion of the total account.