High Tower Pharmacy Pays a Fixed Percentage of Its Net

Multiple Choice

High Tower Pharmacy pays a fixed percentage of its net income out to its shareholders in the form of annual dividends. Given this, the percent shown on a common-size income statement for the dividend account will:

A) remain constant over time.
B) be equal to the dividend amount divided by the net income.
C) vary in direct relation to the net profit percentage.
D) vary in direct relation to changes in the sales level.
E) vary but not in direct relation to any other variable.