Which of the following changes will provide an increase (if only in the short-run)in a firm's ROE?
A) An increase in total assets
B) An increase in the dividend payout ratio
C) An increase in equity
D) An increase in tax rates

Question

Quizplus · Accepted Answer

An increase in the dividend payout ratio can increase ROE in the short-run by reducing retained earnings, thus decreasing equity and increasing the ROE ratio.

Which of the Following Changes Will Provide an Increase (If