If the company follows a strict residual distribution policy and makes distributions in the form of dividends, what is its expected dividend payout ratio for this year? If Blime Inc. increases its debt ratio, its dividend payout ratio will, assuming that all other factors are held constant Most firms have earnings that vary considerably from year to year and do not grow at a reliably constant pace. Furthermore, their required investment may change often. Does this mean that the residual distribution policy approach can't be of any help to most firms? Yes No Gaven Industries, which is in the same sector as Blime Inc., has very stable, predictable earnings, but its capital investment tends to be lumpy. This means that its required capital spending is usually relatively low, but every few years, some sizable expenditures cause the firm's capital budget to be quite large. Should Gaven Industries be following a strict residual distribution policy? Yes No