The possibility of having negative cash flow to stockholders’ and creditors. Introduction: Cash flow to the stockholders’ and creditors: The cash flow to the stockholders’ and creditors of the company refers to the net payment made to the shareholders and creditors of the company. Cash flow to the creditors: It refers to the interest paid to the creditors minus the net fresh debt borrowed by the company. Cash flow to the stockholders: It refers to the dividend paid to the shareholders of the company minus the fresh equity raised by the company.

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Chapter 2, Problem 9CRCT

Summary Introduction

To discuss: The possibility of having negative cash flow to stockholders’ and creditors.

Introduction:

Cash flow to the stockholders’ and creditors:

The cash flow to the stockholders’ and creditors of the company refers to the net payment made to the shareholders and creditors of the company.

Cash flow to the creditors:

It refers to the interest paid to the creditors minus the net fresh debt borrowed by the company.

Cash flow to the stockholders:

It refers to the dividend paid to the shareholders of the company minus the fresh equity raised by the company.

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