Asked by Steven McCoy on May 02, 2024
Verified
A valid reason for a firm to reduce or eliminate its cash dividends is if the firm can raise new capital easily at a very low cost.
Cash Dividends
Distributions of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in the form of cash.
New Capital
Financial resources that are raised by a business through issuing new stocks or bonds to invest in its operations and growth.
- Comprehend the fiscal repercussions resulting from adjustments in dividend practices influenced by tax considerations and opportunities for investment.
Verified Answer
TM
Tobias MancisidorMay 06, 2024
Final Answer :
False
Explanation :
Reducing or eliminating cash dividends is typically done to conserve cash or reinvest in the business, not because new capital can be raised easily at a low cost.
Learning Objectives
- Comprehend the fiscal repercussions resulting from adjustments in dividend practices influenced by tax considerations and opportunities for investment.
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