In the real world, we find that dividends usually exhibit greater stability than earnings fluctuate more widely than earnings tend to be a lower percentage of earnings for mature firms are usually changed every year to reflect earnings changes are usually set as a fixed percentage of earnings

In the real world, we find that dividends usually exhibit greater stability than earnings fluctuate more widely than earnings tend to be a lower percentage of earnings for mature firms are usually changed every year to reflect earnings changes are usually set as a fixed percentage of earnings

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Description: In the real world, we find that dividendsusually exhibit greater stability than earningsfluctuate more widely than earningstend to be a lower percentage of earnings for mature firmsare usually changed every year to reflect earnings changesare usually

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 14MC

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Assume that each of the following changes is independent (i.e., except for this change, all other factors remain unchanged). In each case. indicate what will happen to the earnings muitiplier and explain why. a. The return on equity increases. b. The debt-equity ratio declines . Overall productivity of capital increases d. The dividend payout ratio declines
When considering a top-down approach to fundamental analysis, the impact of macroeconomic factors on a stock’s price can have which of the following effects? an increase in real GDP is followed by improvement in current and expected future profits for companies, leading to higher stock price. an increase in real GDP is followed by performance of industries and subsequent improvement in current and expected future profits for companies, leading to higher stock prices. an increase in real GDP, followed by a significant performance of cyclical industries such as automobile and consumer discretionary, will lead to higher stock prices.
Which of the following situation in which the quality of the company’s pay-out to shareholders may decline a. Decrease in cash position b. Increase in positive NPV investment opportunities c. Increase in capital gains tax d. Decrease in marginal tax rate on dividends Which of the following concepts tells us that dividends are to be paid only when the capital budget has been already supplied? a. Gordon Growth model b. Dividend irrelevance theory c. Retain Earnings break-point principle d. Residual Dividend Model
Which of the following is true? I. If there is no change in gross fixed assets from one year to the next, then net fixed assets would have to have decreased. II. For firms with lower P/E ratios, investors are valuing each dollar of earnings more than for firms with higher P/E ratios. III. A increase in the current ratio indicates an improvement in a firm's long-term solvency condition.
DAS Co. is preparing its financial forecast for next year and its AFN is negative. This means that Select one: O a. the predicted change in total assets must be negative. O b. sales growth must be negative. O c. the dividend payout ratio must be greater than the predicted growth rate in sales. O d. the predicted change in spontaneous liabilities must be greater than the predicted change in total assets.
The dividend growth model CANNOT be used in which of the following? a. When dividends are expected to grow every year. b. When the payout ratio is constant.c. When dividends are expected to grow every quarter. d. When the payout is greater than the amount earned.
Which of the following is true of a leverage ratio? It is a measure of the extent to which a company uses debt compared to equity. O It is a measure of whether the company will have sufficient cash to pay its bills over the following year. O It is a comparison of the company's net income to its stockholder's equity. O It is a measure of the company's ability to be profitable over the coming year. O It is a measure of the rate at which the company "turns over" its inventory.
A company whose stock is selling at a P/E ratio greater than the P/E ratio of a market index most likely has A. an anticipated earnings growth rate which is less than that of the average firm. B. a dividend yield which is less than that of the average firm. C. less predictable earnings growth than that of the average firm. D. greater cyclicality of earnings growth than that of the average firm.
If you were an investor considering purchasing the stock of a company and you were concerned about the company's ability to produce income or operating success for a given period of time, which of the following trends would worry you most? O a decreasing inventory turnover ratio an increasing return on common stockholders' equity ratio O a decreasing return on assets ratio an increasing current ratio
Check all the factors that would be associated with an increase in a firm's price-to-earnings ratio. All the correct factors must be checked to receive credit for getting this question correct . a Increase in the beta of a firm's stock b Decrease in the beta of a firm's stock c Increase in the risk-free rate d Decrease in the risk-free rate e Increase in a firm's growth rate of cash flow f Decrease in a firm's growth rate of cash flow g Increase in the market risk premium h Decrease in the market risk premium
Which of the following factors tend to increase a company's P/E (price- to-earnings) ratio? O Lower expected growth in future earnings and lower uncertainties in future cash flows O Lower expected growth in future earnings and higher uncertainties in future cash flows Higher expected growth in future earnings and higher uncertainties in future cash flows Higher expected growth in future earnings and lower uncertainties in future cash flows A
A downward adjustment in a firm's payout ratio means that the firm is reinvesting a proportion of its earnings back into the business. Save for Later Submit Answer