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What does a company's dividend payout ratio show?

  1. A The proportion of earnings distributed to shareholders
  2. B The dividend yield on the share price
  3. C Total dividends paid over five years
  4. D The growth rate of dividends
Answer

The proportion of earnings distributed to shareholders

Payout ratio equals dividends divided by net income. The remainder is the retention ratio, which funds reinvestment and future growth.

All Finance MCQs

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