Each of the following factors may cause a corporation to lower its dividend payout ratio except:
A) the corporation's earnings predictability is high.
B) the corporation's current and quick ratios are higher than industry average.
C) the corporation's retained earnings balance is high.
D) current common shareholders are unable to participate in new equity offerings.

Question

Quizplus · Accepted Answer

The corporation's earnings predictability is high means that the corporation is able to predict its future earnings with a high degree of certainty. This means that the corporation is less likely to need to retain earnings to cover unexpected expenses or losses. As a result, the corporation is more likely to be able to pay out a higher dividend to its shareholders.

Each of the Following Factors May Cause a Corporation to Lower