Based on the sustainable growth model,an increase in the dividend payout ratio (1 - the retention ratio)will increase the growth in earnings per share in the future.

Question

Quizplus · Accepted Answer

According to the sustainable growth model, an increase in the dividend payout ratio reduces the retention ratio, which in turn reduces the growth rate of earnings per share. Therefore, the statement in the question is false.

Based on the Sustainable Growth Model,an Increase in the Dividend