Jayne Co. is considering paying out a $20 million dividend at the end of 2023 as noted

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Question:

Jayne Co. is considering paying out a $20 million dividend at the end of 2023 as noted in the cash flow below.

1. Based on the cash flow below, would you agree to pay the $20 million dividend?

2. What 2 questions would you ask to help you decide if paying the dividend was appropriate?

Jayne Co.
Statement of Cash Flows
Year Ended 12/31/23
(000s)
Cash flow provided (used) by operating activities
Net Income	70,000
Adjustments to Net Income for operating activities
Add: depreciation expense	5,000
Decrease in Accts Receivable	2,000
Increase in Inventory	(1,000)
Increase in Accts Payable	3,000
Cash flow provided by operating activities	79,000

Cash flow provided (used) by investing activities
Purchase of P P & E	(65,000)
Cash flow used by investing activities	(65,000)

Cash flow provided (used) by financing activities
Proceeds from debt issue	10,000
Proposed Payment of dividends	(20,000)
Cash flow used by financing activities	(10,000)

Net cash provided	4,000
Beginning Cash	3,000
Ending Cash	7,000