is it true that ROE is not affected by a change in the dividend payout ratio? thanks!
Div payout ratio would affect equity and roe is NI/equity
Sure it is. g = ROE * (1- Payout ratio), so ROE=g/(1- Payout ratio). If you increase Payout ratio ROE increases. If you don’t pay any dividiends, ROE is same as growth rate of earnings. If you pay all of your earnings, ROE will be the highest possible.