Aa Aa 2. other dividend policy issues Several factors affect a firm's ability to pay a dividend. Three such factors are described in the table: profitability (an increase in net income), investment opportunities, and capital structure (an increase in the debt ratio). Use the table to indicate how a fim's ability to pay a dividend is affected by the factors described (Hint: Consider each factor in isolation, with everything else held the same Ability to Pay Dividends Factors Affecting Dividend Payment The ability to pay dividends Net income increases. More profitable investment opportunities are available. The ability to pay dividends The firm increases its debt ratio. The ability to pay dividends spandelay Industries Inc. is a typical company that is very concerned with meeting investors' expectations and keeping investors happy. Its eamings tend to fluctuate from year to year because of the nature of the business the company is in. Which of these statements most likely describes Spandelay Industries Inc.'s dividend policy? Q Despite the fact that spandelay Industries Inc.'s eamings tend to fluctuate from year to year, the company most likely pays a predictable, stable dividend each year. O spandelay Industries Inc. most tely pays very large dividends in years with high eamings and smal dividends in the years with low eamings