Problem 1- U.S. public companies with "low" dividend payouts have payout ratios of less than 1 percent, firms with "medium" payouts have ratios between 1 and 48 percent, and "high" payout firms have a ratio of 49 percent or more. Given these data, how would you classify the following firms in terms of their optimal payout policy (high, medium, or low)?
- Successful Pharmaceutical Company
- Electric Utility
- Manufacturer of Consumer Durables
- Commercial Bank
- Start-Up Software Company
Problem 2- U.S. public companies with "low" leverage have an interest-bearing net debt-to-equity ratio of 0 percent or less, firms with "medium" leverage have a ratio between 1 and 62 percent, and "high" leverage firms have a ratio of 63 percent or more. Given these data, how would you classify the following firms in terms of their optimal debt-to-equity ratio (high, medium, or low)?
- Successful Pharmaceutical Company
- Electric Utility
- Manufacturer of Consumer Durables
- Commercial Bank
- Start-Up Software Company