The ratio that is calculated by dividing cash dividends declared on common shares by net earnings is called the:
A) dividend yield ratio.
B) earnings per share ratio.
C) common dividend ratio.
D) payout ratio.

Question

Quizplus · Accepted Answer

The payout ratio is calculated by dividing the cash dividends declared on common shares by the net earnings. This ratio shows the proportion of earnings a company pays to its shareholders in the form of dividends.

The Ratio That Is Calculated by Dividing Cash Dividends Declared