All else the same, an increase in a firm's dividend payout ratio will decrease its internal growth rate.

Name: All else the same, an increase in a firm's dividend payout ratio will decrease its internal growth rate.
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Question

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An increase in a firm's dividend payout ratio means that the firm is distributing more of its earnings to shareholders as dividends, leaving less earnings to be reinvested back into the company for growth. This results in a decrease in the firm's internal growth rate.

All Else the Same, an Increase in a Firm's Dividend