In Problem 2.17 , suppose Raines Umbrella Corp. paid out $34,000 in cash dividends. Is this possible?
Question:
In Problem 2.17, suppose Raines Umbrella Corp. paid out $34,000 in cash dividends. Is this possible? If spending on net fixed assets and net working capital was zero, and if no new shares were issued during the year, what was the change in the firm’s long-term debt account?
During 2018, Raines Umbrella Corp. had sales of $630,000. Cost of goods sold, administrative and selling expenses, and depreciation expenses were $470,000, $95,000, and $140,000, respectively. In addition, the company had an interest expense of $70,000 and a tax rate of 35 percent. (Ignore any tax loss carryback or carryforward provisions.)
Step by Step Answer:
A firm can still pay out dividends if net income is negative it just has to b...View the full answer
Corporate Finance
ISBN: 9781259270116
8th Canadian Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe, Gordon Roberts, Hamdi Driss
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