The growth rate in dividends is a function of two ratios. They are
A)ROA and ROE.
B)dividend yield and growth rate in stock price.
C)ROE and the plowback ratio.
D)book value per share and EPS.

Question

Quizplus · Accepted Answer

The growth rate in dividends is determined by the retention (or plowback) ratio, which represents the portion of earnings that is reinvested back into the company, and the return on equity (ROE), which measures how efficiently the company generates earnings from its equity. Therefore, the correct answer is C, ROE and the plowback ratio. Choices A, B, and D are incorrect because they do not accurately represent the factors that determine dividend growth.

The Growth Rate in Dividends Is a Function of Two