When a corporation decides whether to pay a cash dividend, which of the following is an important consideration?

Question

Quizplus · Accepted Answer

The balances in the corporation's cash account are an important consideration because dividends require the corporation to distribute cash to its shareholders. If there is not enough cash available, the corporation may have to borrow funds or issue more shares to raise the necessary cash. The number of authorized shares, the book value of treasury stock, and the balance of paid-in capital do not directly impact the decision to pay a cash dividend.

When a Corporation Decides Whether to Pay a Cash Dividend