QUESTION 13 A positive cash flow to stockholders indicates which one of the foll
ID: 2818304 • Letter: Q
Question
QUESTION 13
A positive cash flow to stockholders indicates which one of the following with certainty?
The dividends paid exceeded the net new equity raised.
The amount of the sale of common stock exceeded the amount of dividends paid.
No dividends were distributed but new shares of stock were sold.
Both the cash flow to assets and the cash flow to creditors must be positive.
a.The dividends paid exceeded the net new equity raised.
b.The amount of the sale of common stock exceeded the amount of dividends paid.
c.No dividends were distributed but new shares of stock were sold.
d.Both the cash flow to assets and the cash flow to creditors must be positive.
Explanation / Answer
Option a is correct The dividends paid exceeded the net new equity raised.
because dividends are paid to stockholders wheras when new equity is raised cash flow is negative for stockholders.
In other option cash flow may not be positive
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