Question

Which of the following would be most likely to lead to a decrease in a firm's dividend payout ratio?

A. Its earnings become more stable.
B. Its access to the capital markets increases.
C. Its research and development efforts pay off, and it now has more high-return investment opportunities.
D. Its accounts receivable decrease due to a change in its credit policy.
E. Its stock price has increased over the last year by a greater percentage than the increase in the broad stock market averages.

Answer 1

Answer: c. . Its research and development efforts pay off, and it now has more high-return investment opportunities

Step-by-step explanation:

The dividend payout ratio is simply defined as the part of net income that a company or an organization pays to the stockholders of the company in dividends:

The option that can likely to lead to a decrease in a firm's dividend payout ratio is its research and development efforts pay off, and it now has more high-return investment opportunities.