In the context of choosing a share repurchase over declaring dividends, a share repurchase would * a. Decrease available financing whereas declaring dividends increase available financing. b. Increase earnings per share by decreasing the number of shares outstanding. c. Decrease earnings per share by decreasing dividends payable d. invlove all shareholders.

In the context of choosing a share repurchase over declaring dividends, a share repurchase would * a. Decrease available financing whereas declaring dividends increase available financing. b. Increase earnings per share by decreasing the number of shares outstanding. c. Decrease earnings per share by decreasing dividends payable d. invlove all shareholders.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Indicate whether its TRUE or FALSE. Then give an explanation. Firms concerned with the sharemarket reaction to dividend announcements may adopt a “sticky” dividend policy.
1a. Do investors generally prefer dividends or share repurchases? Support your answer. 1b. What are some considerations a company should take into account when establishing dividend policy?
Please answer with reason why the option is correct and why the other options are not correct
1. Statement 1: A split up increases the number of shares held and decreases the cost per share. Statement 2: A stock dividend is recorded as a credit to dividend income. a. Only statement 1 is true b. Only statement 2 is true c. Both statements are true d. Both statements are false
6) Cash dividends paid to preferred shareholders will always have an effective on basic earnings per share. (True/False)
Which one of the following statements concerning financial leverage is correct? A) Financial leverage magnifies both profits and losses. B) Financial leverage increases profits and decreases losses. C) Financial leverage has no effect on a firm's return on equity. D) Increasing financial leverage will always decrease the earnings per share. F) Financial leverage refers to the use of common stock.
The residual dividend approach is the best dividend policy to adopt if a firm’s management wants to maximize the current value per share of the existing stock. Do you agree or disagree with this statement? State and justify your conclusions.
Would you prefer to invest in a company that has a regular dividend policy or a company that has a low regular and extra dividend policy? Please explain
In calculating the value of a firm's equity which of the following is incorrect? Multiple Choice O The market value of equity should be used as opposed to the book value The value of equity represents the value of the firm less the value of debt A premium is usually paid for equity with higher liquidity. D A discount is usually given for controlling interest in a company.
Which of the following is correct a. In a leveraged recapitalization, a firm uses its excess cash to buyback shares b. In an LBO, a firm borrows and repurchases its shares thereby reducng the number of shares outstanding. c. In a leveraged recapitalization, a change of ownership occurs as the firm is sold d. In an LBO, debt is a major component of the financing and a change of control occurs. e. In an LBO, managers use excess cash to repurchase shares
The cost of retained earnings is less than the cost of ordinary shares because of *a. the issuance cost.b. agency costs of free cash flow.c. the taxation on earnings.d. the trust fund doctrine.
Which one of the following statements about dividend policies is FALSE? a. One advantage of dividend reinvestment plans is that they allow shareholders to maintain a position in a company with minimal trading. b. One key disadvantage of a residual dividend policy is that it makes it hard for a company to follow a stable dividend policy. c. The clientele effect suggests that brokerage companies should choose customers whose dividend preferences match those of their client service borkers. d. The "bird-in-the-hand effect" is the argument that investors prefer dividends to capital gains because dividends are more certain than capital gains. e. In today's tax environment, gains through stock repurchases and dividend payments are taxed at the same rate