If a "typical" firm reports $20 million of retained earnings on its balance sheet, could its directors declare a $20 million cash dividend without having any qualms about what they were doing? Explain your answer.
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If a "typical" firm reports $20 million of
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- Assume you are the controller of a large corporation, and the chief executive officer (CEO) has requested that you explain to them why the net income that you are reporting for the year is so low, when the CEO knows for a fact that the cash accounts are much higher at the end of the year than they were at the beginning of the year. Write a memo to the CEO to offer some possible explanations for the disparity between financial statement net income and the change in cash during the year.the retained earnings on a balane sheet are $80,000. Without seeing the rest of hte balance sheet, can you conclue that stockholders shoudl be able to receive a divident in the amount of $80,000 cash from the business? Justify your answerwhich one is correct answer? Q30: ____ determines the ultimate distribution of the firm’s earnings between reinvestment and cash dividend payment to shareholders. a. Financial expertise b. Board of Directors’ agreements c. Dividend policy d. Management efficiency
- 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?In case you retain huge amount of profit of your company for long term investment, what financial decision do you take – to pay high cash dividend? Or to issue bonus share (stock dividend)? And explain why?Which of the following statements is true? a. High liquidity means a company is short on cash and may be unable to pay its debts.b. When a company decides to go public through an IPO, it is typically targeting to sell its shares to only a handful of shareholders. c. If the company has a higher than expected extremely high profit this year, equity holders will benefit more than debt holders as debtholders are the residual claimers for the cash flows of the company.d. In the extreme case, the debt holders take legal ownership of the firm's assets through a process called bankruptcy.e. Equity holders expect to receive dividends and the firm is always legally obligated to pay them.
- A company’s dividend policy refers to the manner in which a firm distributes its earnings to shareholders. Firms can pay out cash in one of two ways: a dividend or a share repurchase. Before 1983, stock repurchases were fairly rare, but today they are common. When a firm decides to pay a dividend, it usually follows the following process. Several critical dates play a role in the dividend payment procedure. In the following table, identify the critical dividend dates. Check boxes that apply for each: Declaration Date Ex-Dividend Date Payment Date Holder-of-Record Date Dividend checks are sent to shareholders. Shares purchased on or after this date do not entitle investors to the stock’s dividend. All shareholders as of this date will be mailed a dividend check. The firm announces its intention to pay a dividend.When a firm is short of cash yet it wishes to distribute something to shareholders, it should consider a ________ a. Cash dividend b. Liquidating dividend c. Stock dividend d. Rights sharesIf a firm has retained earnings of $3.4 million, a common shares account of $5.4 million, and additional paid-in capital of $10.8 million, how would these accounts change in response to a 10 percent stock dividend? Assume market value of equity is equal to book value of equity. (Enter your answers in dollars not in millions. Input all amounts as positive values. Indicate the direction of the effect by selecting "increase," "decrease," or "no change" from the drop-down menu.)
- 9. The company issues new common stock will increase the amount of cash on a company balance sheet? If your answer is false, what is the correct answer:1) What is meant by the term 'dividend policy'?A) The desired pattern of dividends over time when a company determines the proportion of profits to be paid out to shareholders, usually done periodicallyB) The selection of specific groups of shareholders to receive dividends this yearC) The balance to be struck between paying interim dividends and final dividendsD) The determination of the dividend policies of industrial firms by government, designed to encourage earnings retention for investmentIf a firm has retained earnings of $3.7 million, a common shares account of $5.7 million, and additional paid-in capital of $11.4 million, how would these accounts change in response to a 10 percent stock dividend? Assume market value of equity is equal to book value of equity. (Enter your answers in dollars not in millions. Input all amounts as positive values. Indicate the direction of the effect by selecting "increase," "decrease," or "no change" from the drop-down menu.) Retained earnings Common stock Additional paid-in capital decrease increase increase to to to
