Firms with a large number of acceptable capital budgeting projects generally have a high dividend payout ratio.

Question

Quizplus · Accepted Answer

The number of acceptable capital budgeting projects has no direct correlation with the dividend payout ratio. The dividend payout ratio is determined by the firm's dividend policy and financial needs, not the number of projects they have. A firm with a high number of acceptable projects may choose to invest more in those projects rather than paying out dividends, resulting in a lower payout ratio.

Firms with a Large Number of Acceptable Capital Budgeting Projects