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Question : The Debt-Equity Ratio of a Company is 1: 2. Payment of Dividend Payable would

Option 1: Increase debt to equity ratio

Option 2: Decrease debt to equity ratio

Option 3: No change

Option 4: Increase current ratio


Team Careers360 3rd Jan, 2024
Answer (1)
Team Careers360 9th Jan, 2024

Correct Answer: No change


Solution : Answer = No change

Payment of dividend payable will neither increase nor decrease long-term debt and balance of shareholder fund. Payment of dividend payable does not affect long-term debt or shareholder funds, so there is no change in the debt-equity ratio. Dividend payments involve only the distribution of profits and do not impact the capital structure.
Hence, the correct option is 3.

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