Chapter 18, Problem 5P

Summary Introduction

To explain: The dividend policies recommended to Turtle Co. and Hare Corp.

Introduction:

Dividend Policy:

The policy used by a company to form a structure for the disbursement of dividend to its shareholders in terms of amount and frequency is termed as the dividend policy.

Payout Ratio:

The ratio that shows the total dividend paid by a company to its shareholders with respect to its net income is the payout ratio. It is computed by dividing the dividend paid by the company by its net income for the respective period.