The board of Kopi Industries is considering a new dividend policy that would set dividends at 60%

Question:

The board of Kopi Industries is considering a new policy that would set dividends at 60% of earnings. The recent past has witnessed earnings per share (EPS) and dividends paid per share as follows:

The board of Kopi Industries is considering a new dividend

Based on Kopi€™s historical dividend payout ratio, discuss whether a constant payout ratio of 60% would benefitshareholders.

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...