Directors usually declare dividends less than the legal maximum and thereby allow retained earnings to increase as a matter of corporate financial policy for what reason(s)?
a. Available cash did not increase by as much as the amount of earnings, so paying the maximum legally permitted dividends would require raising more cash.
b. Restricting dividends in prosperous years may permit continued level or steadily growing dividend payments in poor years.
c. The firm may need funds for expansion of working capital or for plant and equipment.
d. The firm can distribute the funds to shareholders with lower tax burdens for them by using the cash to repurchase shares.
e. all of the above
E
You might also like to view...
The ________ phase of marketing research is generally the most expensive and the most prone to error
A) contact B) research planning C) questionnaire design D) interview design E) data collection
Mini-Case Question. Aster Inc identifies that the market attractiveness index for the cell phone market is equal to 25
The firm decides to adopt a strategy of minimizing investment in its business, and striving for maximum cash flow from its market position. Aster Inc aims to manage prices and marketing resources in a way that maximizes its cash flow without exiting the market. Aster Inc is considering on using which of the following strategic market plans? A) an invest to grow strategy B) a monetize strategy C) an optimize position strategy D) a harvest strategy E) a disintermediation strategy