Which one of these actions by a firm is an example of milking the property? Assume the firm is in a period of financial distress.
A)Repaying a bond that matured
B)Paying the semiannual bond interest
C)Paying an extra dividend
D)Cutting a regular dividend
E)Paying a regular dividend

Question

Quizplus · Accepted Answer

Milking the property refers to extracting as much money as possible out of a property or asset without making any further investment or improvements. Paying an extra dividend would fall under this category as the firm is distributing more cash than required to shareholders while not investing in improving the company's financial position.

Which One of These Actions by a Firm Is an Example