1. based on the residual dividened policy, if company has better operating perfo
ID: 2751444 • Letter: 1
Question
1. based on the residual dividened policy, if company has better operating performance with a higher net income, it has more cash which can be distributed to common shareholders given the same capital budget
a true
b false
A reverse stock split will cause a change in total dollar amount shown in which of the following balance sheet accounts?
a. cash and equivalents
b. common stock
c. retained earnings
d. none of the above
A negative value of the additional funds needed which is generated when we forecast pro forma balance sheet for a company means that the company has more financing than needed. the company can use the funds to
a. buy stock back
b. pay off debt
c. buy short term investments
d. all of the above
Toms books sells paperback books for $5 each. the variable cost per book is $4. The fixed cost are $40,000. Whats the publishers breaking even sales volume?
a. 8,000 books
b 10,000
c. 20,000
d. 40,000
Explanation / Answer
1)
Given statement is TRUE.
Under residual dividend policy, residual earnings left after meeting new capital requirement will be distributed as dividends. Here, the capital budget was same, so no amount needs to invested in capital requirements.
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