A stock dividend may be distributed even if the company is short of cash.

Question

Quizplus · Accepted Answer

This is because stock dividends are distributions of additional shares of stock to existing shareholders, rather than actual cash payments. Therefore, the company does not need to have cash on hand to issue a stock dividend. However, it is worth noting that companies typically only issue stock dividends if they believe they have the financial strength to do so and that it will benefit shareholders.

A Stock Dividend May Be Distributed Even If the Company