The higher a company's dividend payout ratio, the higher the company's internal growth rate.

Question

Quizplus · Accepted Answer

The dividend payout ratio is the percentage of earnings paid out as dividends to shareholders. A higher dividend payout ratio means that the company is paying out more of its earnings as dividends, which leaves less money for reinvestment in the business. Therefore, a higher payout ratio would lead to a lower internal growth rate, as the company has less funds to invest in expanding its operations.

The Higher a Company's Dividend Payout Ratio, the Higher the Company's