Reference no: EM132204062
Distribution decisions are complicated
Based upon your understanding of the constraints on dividend payments, Identify the type of constraints this condition represents, other factors held constant
Which of the following states that common stock dividends cannot be paid if the company has not paid its preferred stock dividends
A) Bond indenture
B) Preferred Stock Restriction
C) Impairment of capital rule
A company's dividend policy can be impacted by internal and external factors in the environment in which it operates. For each of the following below, list whether it pays a higher payout or a lower payment
A) A firm has several investment opportunities and limited internal cash flow generation
B) A firm has a history of stable earnings and expects earnings stability in the future
C) In an inflationary environment, a firm has to increase its cash balances to meet the rising prices of its inventory, wages, and other short term liabilities
A firm with A or B flotation costs is more likely to have a high dividend payout ratio
A) Greater
B) Lower
Any and all help appreciated. Thank you in advance