Question
A company pays a dividend on common stock, thereby reducing its cash balances. What effect does payment of the dividend have on its leverage ratio
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A company pays a dividend on common stock, thereby reducing its cash balances. What effect does payment of the dividend have on its leverage ratio and net profit margin?
a. Decreases debt/equity; increases net profit/sales
b. Decreases debt /equity; decreases net profit/sales
c. Increases debt/equity; no effect on net profit/sales
d. No effect on debt/equity; decreases net profit/sales
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International Financial Management
Authors: Jeff Madura
11th Edition
0538482966, 9780538482967
