Question

The dividend payout ratio describes: a.dividends as a percentage of the price/earnings ratio. b. the relationship...

The dividend payout ratio describes:

a.dividends as a percentage of the price/earnings ratio.

b. the relationship of dividends per share to market price per share.

c. the percentage change in dividends this year compared to last year.

d. the proportion of earnings paid as dividends.

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Answer #1

The correct option is D.

Dividend payout ratio=Dividend/Earnings

Hence it describes the portion of earnings that is paid out as dividends.The remaining balance is referred to as 'addition to retained earnings' and is added to retained earnings balance of the company.

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