Dividend Payout Ratio Calculation
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Questions and Answers

What is the main reason that a company's stock price might drop after a share buyback program?

  • The company is trying to reduce the number of outstanding shares
  • The company is signaling that its shares are overvalued
  • The company is facing financial difficulties and is not healthy (correct)
  • The company is indicating that it lacks growth opportunities

    • If a company has a dividend payout ratio of 20%, what is the company's retention ratio?

  • 50%
  • 80% (correct)
  • 100%
  • 20%

    • Which of the following is NOT a potential downside of a company conducting a share buyback program?

  • It can signal that the company lacks growth opportunities
  • It can make the stock more attractive to potential investors (correct)
  • It can create challenges for the company during an economic downturn
  • It can be ill-timed and lead to a drop in the stock price

    • If a company has $100 million in net income and pays out $20 million in dividends, what is the company's dividend payout ratio?

    <p>20%</p> Signup and view all the answers

    Which of the following is a potential pro of a company conducting a share buyback program?

    <p>It can increase the value of the remaining shares</p> Signup and view all the answers

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