According to the Residual Theory of Dividends

question 67

Multiple Choice

According to the residual theory of dividends

• A) dividends are to be paid out only after investment financing needs have been met.
• B) earnings remaining after payment of preferred stock dividends should be paid to common stockholders.
• C) dividend payments are a constant percentage of EPS.
• D) a dividend is the residual above the payout ratio.

---

Definitions:

Relative Size

An assessment of an entity's size compared to other entities in the same context, such as a company's market share relative to its competitors.

Recurring Variances

Variances that occur regularly or repeatedly over time, often indicating a systematic issue within a process or system.

Rule Of Thumb

A general principle or guideline that is not strictly accurate or reliable for every situation but is used because of its practicality.

Standard Cost

Predetermined costs for manufacturing or service processes, used as benchmarks for performance evaluation.