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 a situation where a firm extracts as much cash as possible from the company in the short-term to benefit shareholders, often at the expense of long-term growth and sustainability. Paying an extra dividend in a period of financial distress can be seen as milking the property because it effectively depletes the company's cash reserves and does not contribute to the long-term health of the firm. Repaying a bond or paying bond interest, cutting a regular dividend, or paying a regular dividend all involve using company funds in a more responsible, long-term manner.

Which One of These Actions by a Firm Is an Example