All else the same, an increase in a ﬁrm's dividend payout ratio will decrease its external ﬁnancing
needed.

Name: All else the same, an increase in a ﬁrm's dividend payout ratio will decrease its external ﬁnancing needed.
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Question

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An increase in a firm's dividend payout ratio means more earnings are paid out as dividends, leaving less retained earnings to finance operations, thus increasing the need for external financing.

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