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23. A corporation suffered a big loss in a given year. The management expects future earning to return to their normal level.
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Answer #1

Answer: - Option C is Correct.

When a firm suffered a loss, they may pay dividend out of reserves and will be back to normal level of earning in future. This will not affect Payout Ratio because Payout is Dividends/ Earnings but this year there is no Earnings. So no question of Change in Payout.

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