Which financial ratio indicates the percentage of profit that is paid out as dividends?
A) return on equity
B) dividend payout ratio
C) dividend yield on common stock
D) price/earnings ratio
E) debt to asset ratio

Question

Quizplus · Accepted Answer

The dividend payout ratio indicates the percentage of profit that is paid out as dividends. Option A (return on equity) measures the profitability of a company's equity, Option C (dividend yield on common stock) measures the dividend income earned by investors relative to the market price per share, Option D (price/earnings ratio) compares a company's current share price to its earnings per share, and Option E (debt to asset ratio) measures the proportion of a company's assets that are financed through debt. None of these ratios directly indicate the percentage of profit paid out as dividends.

Which Financial Ratio Indicates the Percentage of Profit That Is