Read the following passage and answer the question.

MAM is renowned multiplex operator in India. It own around 500 screens in 100 properties at 90 locations in the country. Considering the fact that there is more growing trend among the people to spend more of their disposable income on entertainment, company planned to add more screen at existing locations and start at new locations also. Further, they plan to add food chain also at their locations. The company planned to float equity shares in market to raise the desired capital. The issue was fully subscribed and paid. Over the year, the sale and the profit of the company have increased tremendously and it has been declaring higher dividend and the market price of its share has increased manifolds.

Over the years, the sale and the profit of the company have increased tremendously and it has been declaring higher dividend and the market price of its share has increased manifolds."

The quoted lines highlighted one of the factors affecting dividend decision. Identify the factor.

Stability of earnings

The correct answer is option 2- Stability of earnings.

The factor highlighted in the quoted lines is "stability of earnings".

The passage indicates that over the years, the company's sales and profits have increased significantly, leading to higher dividends and a higher market price for its shares. Stability of earnings is crucial for consistent dividend payments. If a company consistently has strong earnings, it is more likely to declare higher dividends and maintain or increase its share price. Thus, the quoted lines reflect how the stability and growth of earnings contribute to the company's ability to pay higher dividends and achieve a higher share price.