Marla's Homemade Cookies has net income of $1,280. During the year, the company sold $50 worth of common stock and paid dividends of $40. What is the amount of the cash flow to stockholders?

Question

Quizplus · Accepted Answer

The cash flow to stockholders is calculated as dividends paid minus net new equity raised. Here, dividends paid are $40 and net new equity raised (from selling common stock) is $50. Therefore, the cash flow to stockholders is $40 - $50 = -$10.

Marla's Homemade Cookies Has Net Income of $1,280