Annual cash dividends divided by annual earnings; or alternatively, dividends per share divided by earning per share is termed as:
Correct answer: C. Dividend payout ratio
- A. Earning per share ratio
- B. Proposed dividend ratio
- C. Dividend payout ratio
- D. Expected dividend ratio
Explanation
The dividend payout ratio shows what portion of earnings is distributed as dividends: dividends divided by earnings, or DPS divided by EPS. The other ratios do not use this standard definition.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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