The higher the dividend payout ratio, the more a company must rely on external financing. True False
Hello Sir/ Mam
YOUR REQUIRED ANSWER IS TRUE
After the company has raised funds, the source for additional funding for the company limits to external funding or using internally generated funds. But, if the company has a higher dividend payout ratio, then it is saving a small amount from the earnings and hence, will not have internal funding available. Hence, the company should rely on external funding.
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