Consider each of the following as an independent case: a. Increase in dividend payout ratio b. Decrease
Question:
a. Increase in dividend payout ratio
b. Decrease in interest coverage
c. Increase in return on sales
d. Increase in the P-E ratio
e. Increase in receivables collection period
f. Increase in current ratio
Required
1. From the point of view of a manager of the company, indicate which of these items indicates good news and which indicates bad news. Explain your reasoning for each.
2. Would any of these items be viewed differently by an investor than by a manager? If so, which ones? Why?
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...
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Step by Step Answer:
1 a An increase in the dividend payout ratio could arise because dividends were increased while earnings remained the same or because dividends remained the same while earnings fell Dividend increases ...View the full answer
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Related Book For 
Introduction to Financial Accounting
ISBN: 978-0133251036
11th edition
Authors: Charles Horngren, Gary Sundem, John Elliott, Donna Philbrick
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