Trenton Publishing follows a strict residual dividend policy. All else equal, which of the following factors would be most likely to lead to an increase in the firm's dividend per share?

Question

Quizplus · Accepted Answer

According to the residual dividend policy, dividends are paid out of residual earnings after all investments with positive net present values have been undertaken. Therefore, an increase in net income would result in a higher amount of residual earnings available for dividends, leading to an increase in dividend per share. The other options do not necessarily impact the amount of residual earnings available for dividends.

Trenton Publishing Follows a Strict Residual Dividend Policy