Why is it difficult for a firm with weaker cash flows to mimic a dividend increase undertaken by a firm with stronger cash flows?
Answer to relevant QuestionsAccording to the residual theory of dividends, how does a firm set its dividend? With which dividend policy is this theory most compatible? Does it appear to be empirically validated? If high- dividend stocks offer a higher expected (and required) return than low- dividend stocks, due to the higher personal taxes levied on the former, why don’t corporations simply reduce dividend payments and thus lower ...On January 1, 20069, you examine two unlevered firms that operate in the same industry, have identical assets worth $80 million that yield a net profit of 12.5 percent per year, and have 10 million shares outstanding. During ...What can be done to deal with uncertainty in the cash budgeting process? Why might an intra-month view of the firm’s cash flows cause a well-prepared cash budget to fail? What is a collection policy? What is the typical sequence of actions taken by a firm when attempting to collect an overdue account?
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