Ford Motor Company is an internationally known manufacturer of automobiles and trucks. The company recently lost over
Question:
Ford Motor Company is an internationally known manufacturer of automobiles and trucks. The company recently lost over $12 billion in a single year of operations. Despite that staggering loss, the company issued the following press release:
DEARBORN, Mich., July 13 /PRNewswire-FirstCall/—The Board of Directors of Ford Motor Company (NYSE: F) today declared a third quarter dividend of 5 cents per share on the company’s common stock. The dividend, which is payable on Sept. 1 to shareholders of record on Aug. 2 is a reduction of 5 cents per share from the dividend paid in the second quarter.
Required:
1. Explain why Ford can pay dividends despite its loss.
2. What factors did the board of directors consider when it declared the dividends?
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
Step by Step Answer:
Req 1 A corporation does not need to earn net income in a given year in order to declare and pay ...View the full answer
