D’Ambrosio Ltd. has been operating for 10 years. The company’s net income and other information since inception are shown below.
a. Which year would have been the first year D’Ambrosio could have legally paid out dividends?
b. Would you recommend that the company pay out dividends at that time? Explain briefly.
c. In 2015, the board of directors was starting to believe the company was becoming more stable. Directors began discussing the options for rewarding the shareholders for the company’s success but they were hesitant to commit the company to any long-term payments. What options would you suggest to the board?
d. In 2016, the board felt more comfortable that the company was on the road to long-term success. What dividend policy could the company consider now? If the company wanted to preserve its cash, what other option could it consider?

  • CreatedJune 12, 2015
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