Question

Which one of the following depicts a correct relationship? O Equity multiplier 1- Debt-equity ratio O ROE 1- ROA O Dividend payout ratio -1- Retention ratio O Total asset turnover 1+ Capital intensity ratio O ROA ROEx (1+Debt-equity ratio)
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Answer #1

Dividend payout ratio = Dividends/Net income

Retention ratio = Retained earnings/Net income

Dividends+Retained earnings = Net income

Hence, correct option is “Dividends payout ratio = 1-Retention ratio”

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