Question

The dividend growth rate is equal to the product of what two ratios? a) roa and current ratio. B) roe and retention ratio. C) profit margin and roa. D) roa and roe. E) profit margin and roe

Answer 1

The dividend growth rate is equal to the product of return on assets and return on equity option (D) is correct.

What is return on equity?

The return on equity ratio shows how much money a company makes on the money it invests in its shareholders. Investors frequently use this metric to assess current and potential business investments.

As we know, the dividend growth rate is the annualized percentage rate of increase in a stock's dividend over a given time period.

Dividend growth rate  = (Return on assets)×(Return on equity)

Thus, the dividend growth rate is equal to the product of return on assets and return on equity option (D) is correct.

Learn more about the return on equity here:

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