A corporation has been paying out one million dollars a year in dividends for th

Question

A corporation has been paying out one million dollars a year in dividends for the past several years. This year, the company wants to pay the million dollar dividend but cant. All of the following are reasons the company cannot continue its dividend policy except:

A) the company's cash balance is less than 1 million
B) the company's liabilities exceed its assets
C) the company's net income this year is less than 1 million
D) the company's retained earnings balance at the years end is less than one million

Explanation / Answer

A corporation has been paying out one million dollars a year in dividends for the past several years. This year, the company wants to pay the million dollar dividend but cant. All of the following are reasons the company cannot continue its dividend policy except:

A) the company's cash balance is less than 1 million
B) the company's liabilities exceed its assets
C) the company's net income this year is less than 1 million
D) the company's retained earnings balance at the years end is less than one million

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