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    Level of dividend payout

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    Will the following have high, medium or low dividend payout ratios, and why?
    a) company with high business risk
    b) a company that goes through an unexpected drop in earnings from an upward sloping trend line.
    c) a firm with ordinary growth, alot of borrowing capacity and high liquidity.

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    Solution Preview

    a) Company with high business risk will have low dividend pay out. As the company's business is high risk it would retain the earnings for the future eventualities and bad periods

    b) The firm has been ...

    Solution Summary

    Level of dividend payout is examined.