**Question:**Which of the following is not one of the primary considerations management must make before a cash dividend is declared?**Options:**- ○ The availability of funds to pay the dividend.- ● The effect of inflation on the company and alternative uses of the cash to be paid for dividends.- ○ The legal permissibility of the dividend.- ○ The tax impact on stockholders of the receipt of the dividends.**Explanation:**The option with a filled circle next to it (●) indicates the correct answer, which is "The effect of inflation on the company and alternative uses of the cash to be paid for dividends." This implies that this is not a primary consideration before declaring a cash dividend, whereas the other options are likely to be more immediate concerns for management.

Which of the following is not one of the primary considerations management must make before a cash dividend is declared? O The availability of funds to pay the dividend. O The effect of inflation on the company and alternative uses of the cash to be paid for dividends. The legal permissability of the dividend. O The tax impact on stockholders of the receipt of the dividends.

Which of the following is not one of the primary considerations management must make before a cash dividend is declared? O The availability of funds to pay the dividend. O The effect of inflation on the company and alternative uses of the cash to be paid for dividends. The legal permissability of the dividend. O The tax impact on stockholders of the receipt of the dividends.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

When does a company declare a cash dividend
Interpretation No. 46R relates to the issue of whether an investing firm is the primary beneficiary in a variable-interest entity. When is an entity classified as a variable interest entity? Starting with free cash flows from operations, discuss how an analyst would measure free cash flows to common equity shareholders.
Please explain the impact on the balance sheet when the board of directors declares a cash common sotck dividend.
If the stock market is efficient, why do companies manage their earnings? O To avoid violating debt covenants. O To receive bonuses based on reported earnings. O Because companies do not believe the Efficient Market Hypothesis. O All of the above.
How and why should the cost of capital change when the Company must rely on new issues of common stock v retained earnings when obtaining capital from equity?
Which of the following is not an input in a company's WACC? O Long-term debt. Preferred stock Retained earnings Accounts payable
Cash dividends decrease the assels and decrease the refained earnings of a corporation True O False
Explain two reasons for the firm management to prefer stock repurchases over cash dividends.
Suppose managers of a firm know that the company is approaching financial distress. Should the managers borrow from creditors and issue a large one-time dividend to shareholders? How might creditors control this potential transfer of wealth?
Determine whether it is common stock, preferred stock, or bonds that has the feature best related to the following considerations. a. Ownership and control of the firm b. Obligation to provide return c. Claims to assets in bankruptcy d. High cost of distribution e. Highest return f. Highest risk g. Tax-deductible payment h. Payment partially tax-exemptto corporate recipient