EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 15, Problem 1QTD
Summary Introduction

To discuss: The legal constraints which restricts the cash dividend which could be paid by companies or firms.

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Explanation of Solution

Compute Earning cost:

The legal constraints which restricts the cash dividend amounts:

  • Capital of the firm will not have any effects or will not diminish as an outcome of dividend payments.
  • Dividends commonly need to be paid from the past and present net earnings.
  • Dividend cannot be paid or distributed when the company or firm is in a state of insolvency.

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