BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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High earnings high cash flows unusual earnings and high growth opportunities
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High earnings high cash flows stable earnings and high growth opportunities
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High earnings high cash flows stable earnings and lower growth opportunities
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High earnings low cash flows stable earnings and lower growth opportunities
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Detailed explanation-1: -Higher dividend per share is associated with high earnings, high cash flows, stable earnings and lower growth opportunities.
Detailed explanation-2: -Declaring and paying dividends has nothing directly to do with current earnings per share (EPS). Companies can pay a dividend per share that exceeds its EPS.
Detailed explanation-3: -A company having higher and stable earnings can declare higher dividends than a company with lower and unstable earnings.
Detailed explanation-4: -The EPS figure does not reflect the cash that shareholders receive, however. It is only an accounting figure. Dividends per share, on the other hand, do represent the portion of the company’s earnings that is paid out to each shareholder.