An increase in any of the following will cause the expected dividend growth rate to increase for an industry except A) Profit margin B) Total asset turnover C) Return on equity D) Dividend payout ratio E) Financial leverage

Question

Quizplus · Accepted Answer

An increase in dividend payout ratio would actually decrease the expected dividend growth rate because the firm would be distributing more of its profits to shareholders instead of retaining them for future growth opportunities. The other factors - profit margin, total asset turnover, return on equity, and financial leverage - all have a positive effect on the expected dividend growth rate.

An Increase in Any of the Following Will Cause the Expected