You are the CFO of a large publicly traded US corporation. For years, your company has been paying steady dividends, with slight increases every few years. But a rapidly changing external environment means you face a need for a substantial additional funds for capital expenditures to acquire fixed assets and addressing the quickly changing needs of your customer base. There is not time to initiate it and effect is stock offering, and therefore face the choice of either cutting dividends or increasing debt loads. 

Please discuss the pros and cons of each funding source, the impacts each could have on your stock price, and why?

Answer rating: 100% (QA)

Cut ting D ivid ends Pros Cutting dividends will enable the company to save the cash that would have been distributed to shareholders and instead use ... View the full answer