Explain the trade-off between retaining earnings internally


Question: 1. What is meant by the term dividend payout ratio?

2. Explain the trade-off between retaining earnings internally and paying cash dividends.

3. What is the residual dividend theory?

4. In Europe, why do most bank loans include restrictions on dividend payments during the amortization of the loans? Is this restriction appropriate in the case of small firms?

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Finance Basics: Explain the trade-off between retaining earnings internally
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