4. Which of the following statements is FALSE? A. The way a firm chooses between paying...
4. Which of the following statements is FALSE? A. The way a firm chooses between paying dividends and retaining earnings is referred to as its payout policy. B. From an accounting perspective, dividends generally reduce the firm's current (or accumulated) retained earnings. C. Most companies that pay dividends pay them semiannually. D. Occasionally, a firm may pay a oneminus time, special dividend that is usually much larger than a regular dividend.
Homework Answers
4. The incorrect statement is
C. Most companies that pay dividends pay them semiannually.
Usually, the dividends are paid annually.
All other statements are correct.
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4. Which of the following statements is FALSE? A. The way a
firm chooses between paying...
Which of the following statements is FALSE regarding profitable and unprofitable growth?
Which of the following statements is FALSE regarding profitable and unprofitable growth? If the firm retains more earnings, it will bea able to pay out less of those earnings, which means that the firm will have to reduce its dividend. A firm can increase its growth rate by retaining more of its earnings. Cutting the firm's dividend to increase investment will raise the stock price if. and only if, the new investments have a positive net present value (NPV). If...
Alternative dividend policies Over the last 10 years, a firm has had the earnings per share shown in the following tabl...
Alternative dividend policies Over the last 10 years, a firm has had the earnings per share shown in the following table:. a. If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, what would be the annual dividend for 2017? b. If the firm had a dividend payout of $1.00 per share, increasing by $0.10 per share whenever the dividend payout fell below 50% for two consecutive...
20. Which of the following Statements is correct? a. If a company uses the residual dividend...
20. Which of the following Statements is correct? a. If a company uses the residual dividend model to determine its dividend payments, dividends payout will tend to increase whenever its profitable investment opportunities increase. b. Large stock repurchases financed by debt tend to increase earnings per share, but they also increase the firm's financial risk. c. The tax code encourages companies to pay dividends rather than retain earnings. d. The stronger management thinks the clientele effect is, the more likely...
Which of the following statements is correct? a. If a firm follows the residual dividend model,...
Which of the following statements is correct? a. If a firm follows the residual dividend model, then a sudden increase in the number of profitable projects would be likely to lead to a reduction of the firm's dividend payout ratio b. The clientele effect explains why so many firms change their dividend policies so often c. One advantage of adopting the residual dividend model is that this policy makes it easier for a corporation to attract a specific and well-identified...
1. True or False? The larger the firm's TIE ratio, the less times a firm can...
1. True or False? The larger the firm's TIE ratio, the less times a firm can pay its interest expenses. 2. True or False? Your firm has a debt to equity ratio of 55%, and its biggest competitor has a debt to equity ratio of 66%. Based on this information, your firm is less levered. 3. True or False? A dividend payout ratio larger than 50% indicates a firm retains more than it pays out to shareholders. 4. True or...
Which of the following statements is correct? a. If a firm follows the residual dividend policy,...
Which of the following statements is correct? a. If a firm follows the residual dividend policy, then a sudden increase in the number of profitable projects is likely to reduce the firm’s dividend payout during that year. b. The clientele effect can explain why many firms change their dividend policies so often. c. One advantage of adopting the residual dividend policy is that this policy makes it easier for corporations to develop a specific and well-identified dividend clientele. d. Stock...
A policy under which the firm pays dividends only after its capital investment needs are met,...
A policy under which the firm pays dividends only after its capital investment needs are met, and while maintaining a constant debt/equity ratio, is called a ________. A) Clientele effect. B) Homemade dividend. C) Bird-in-the-hand approach. D) Constant dividend growth model. E) Residual dividend approach. Most firms are reluctant to ________ because of the associated implications concerning the firm. A) Pay a liquidating dividend. B) Pay a special dividend. C) Increase a cash dividend. D) Reduce a regular cash dividend....
Please answer all parts. thank you! Low-regular-and-extra dividend policy Bennett Farm Equipment Sales, Inc. is in...
Please answer all parts. thank you!
Low-regular-and-extra dividend policy Bennett Farm Equipment Sales, Inc. is in a highly cyclical business. Although the firm has a target payout ratio of 25 %, its board realizes that strict adherence to that ratio would result in a fuctuating dividend and create uncertainty for the firm's stockholders. Therefore, the firm has declared a regular dividend of $0.60 per share per year with extra cash dividends to be paid when earnings justify them. Earnings per...
Low-regular and extra dividend policy Bennett Farm Equipment Sales, Inc. is in a highly cyclical business....
Low-regular and extra dividend policy Bennett Farm Equipment Sales, Inc. is in a highly cyclical business. Although the firm has a target payout ratio of 30%, its board realizes that strict adherence to that ratio would result in a Puctuating dividend and create uncertainty for the firm's stockholders. Therefore, the firm has declared a regular dividend of $040 per share per year with extra cash dividends to be paid when earnings justify them. Eamnings per share for the last several...
The residual dividend policy approach to dividend policy is based on the theory that a firm's...
The residual dividend policy approach to dividend policy is based on the theory that a firm's optimal dividend distribution policy is a function of the firm's target capital structure, the investment opportunities available to the firm, and the availability and cost of external capital. The firm makes distributions based on the residual earnings. Consider the case of Red Bison Petroleum Producers Inc.: Red Bison Petroleum Producers Inc. has generated earnings of $180,000,000. Its target capital structure consists of 60% equity...
Alternative dividend policies Over the last 10 years, a firm has had the earnings per share shown in the following table:. a. If the firm's dividend policy were based on a constant payout ratio of 40% for all years with positive earnings and 0% otherwise, what would be the annual dividend for 2017? b. If the firm had a dividend payout of $1.00 per share, increasing by $0.10 per share whenever the dividend payout fell below 50% for two consecutive...
Please answer all parts. thank you!
Low-regular-and-extra dividend policy Bennett Farm Equipment Sales, Inc. is in a highly cyclical business. Although the firm has a target payout ratio of 25 %, its board realizes that strict adherence to that ratio would result in a fuctuating dividend and create uncertainty for the firm's stockholders. Therefore, the firm has declared a regular dividend of $0.60 per share per year with extra cash dividends to be paid when earnings justify them. Earnings per...
Low-regular and extra dividend policy Bennett Farm Equipment Sales, Inc. is in a highly cyclical business. Although the firm has a target payout ratio of 30%, its board realizes that strict adherence to that ratio would result in a Puctuating dividend and create uncertainty for the firm's stockholders. Therefore, the firm has declared a regular dividend of $040 per share per year with extra cash dividends to be paid when earnings justify them. Eamnings per share for the last several...
The residual dividend policy approach to dividend policy is based on the theory that a firm's optimal dividend distribution policy is a function of the firm's target capital structure, the investment opportunities available to the firm, and the availability and cost of external capital. The firm makes distributions based on the residual earnings. Consider the case of Red Bison Petroleum Producers Inc.: Red Bison Petroleum Producers Inc. has generated earnings of $180,000,000. Its target capital structure consists of 60% equity...
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