It is typical for the growing companies such as Amazon, Google, Twitter, Zoom etc. not to...

Transcribed Image Text:

It is typical for the growing companies such as Amazon, Google, Twitter, Zoom etc. not to share their profits by distributing dividends to shareholders, as they believe that the companies have enough lucrative projects within companies to use cash. Mature companies are known for regular (quarterly) distributions. For example, Southwest Airlines Co is an air carrier based in Dallas, Texas. As of September 2019, it is the largest domestic air carrier in the United States, as measured by the number of domestic originating passengers boarded. In its 10-K (Annual report) for the year ended December 31, 2019, Southwest wrote: "During 2019, the Company continued to return value to its Shareholders. The Company returned $2.4 billion to Shareholders through $372 million in dividend payments and $2.0 billion through four separate accelerated share repurchase programs and other open market share repurchases....These purchases will be recorded as treasury share repurchases for purposes of calculating earnings per share." How was accounting equation will be impacted by both the dividend declaration and cash payment? It is typical for the growing companies such as Amazon, Google, Twitter, Zoom etc. not to share their profits by distributing dividends to shareholders, as they believe that the companies have enough lucrative projects within companies to use cash. Mature companies are known for regular (quarterly) distributions. For example, Southwest Airlines Co is an air carrier based in Dallas, Texas. As of September 2019, it is the largest domestic air carrier in the United States, as measured by the number of domestic originating passengers boarded. In its 10-K (Annual report) for the year ended December 31, 2019, Southwest wrote: "During 2019, the Company continued to return value to its Shareholders. The Company returned $2.4 billion to Shareholders through $372 million in dividend payments and $2.0 billion through four separate accelerated share repurchase programs and other open market share repurchases....These purchases will be recorded as treasury share repurchases for purposes of calculating earnings per share." How was accounting equation will be impacted by both the dividend declaration and cash payment?

Answer rating: 100% (QA)

1 Dividend Declaration Impact on Shareholders Equity When a company declares a dividend it is essentially committing to distribute a portion of its earnings to shareholders This commitment reduces the ... View the full answer