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Can anyone help me with this accounting question for a interview problem?


Dividend Policy. For each of the following four groups of companies, state whether you would expect them to distribute a relatively high or low proportion of current earnings and whether you would expect them to have a relatively high or low price-earnings ratio.
a.High-risk companies.
b.Companies that have recently experienced a temporary decline in profits.
c.Companies that expect to experience a decline in profits.
d.鈥淕rowth鈥?companies with valuable future investment opportunities.

High-risk companies: Usually don't and reinvest the money back into the company.

Companies experiencing temporary decline in profits: For publicly traded companies if they are already giving out dividends, they would probably would just not raise the dividend amount they will pay each quarter. To decrease quarterly dividend payments would mean a lot of bad news and the company's stock would drop. If the company is privately held, they can cut dividends.

Companies that expect to experience decline in profits: Same as Companies that have recently experienced a temporary decline in profits.

Growth companies can be like high-risk companies where they reinvest profits back into the company. Some of them may pay out a small dividend.

Companies that tend to pay big dividends are utility companies and those companies that are not considered growth.

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