Question
The capital structures of Companies A & B were the same at the end of year date 31/12/x5. In the 20x6 financial year, the profit
The capital structures of Companies A & B were the same at the end of year date 31/12/x5. In the 20x6 financial year, the profit after tax for both Companies remained equal, while there were also no changes in the debt balances for A & B. If Company A paid a higher dividend than Company B in 20x6, which of the following statements would be true at the end of year date of 31/12/x6?
Select one:
a. More information is required to understand the impact of these changes on gearing
b. The gearing ratio of A will be lower than that of B
c. The gearing ratios of both companies will remain equal
d. The gearing ratio of A will
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