Week 4 Flashcards
1
Q
Financial planning helps…
A
Prepare for future
2
Q
Dividend payout ratio
A
Proportion of net income paid out as dividend
3
Q
Dividend payout ratio equation
A
Dividend paid / net income
4
Q
Retention ratio
A
Proportion of net income retained
5
Q
Retention ratio equation
A
Retained earnings / net income
6
Q
Internal growth rate (IGR)
A
Maximum sales growth with retained earnings without external funding
7
Q
Sustainable growth rate (SGR)
A
Maximum sales growth without new equity, keeping gearing unchanged
8
Q
You can determine growth if it is…
A
Positive
9
Q
What does positive growth mean?
A
Increased profitability, asset efficiency rate and leverage
Higher retention rate
10
Q
Financial policy
A
Decision regarding the balance of retained earnings (b) v rewarding shareholders with dividends (d)
