A measure of how well earnings support dividend payments is:
A)earnings per share.
B)dividend payout ratio.
C)dividends per share.
D)dividend yield.

Question

Quizplus · Accepted Answer

Dividend payout ratio measures the percentage of earnings that are paid out as dividends. A higher payout ratio indicates that a company is paying out a larger portion of its earnings as dividends, which may be sustainable or unsustainable depending on the company's financial situation. Earnings per share and dividends per share are measures of the amount of earnings and dividends per share of stock, respectively, but do not provide information about how well earnings support dividend payments. Dividend yield indicates the return on investment from dividends, but does not provide information about the sustainability of dividend payments based on earnings.

A Measure of How Well Earnings Support Dividend Payments Is