Which two of the following tend to limit the amount of dividends that can be paid by a leveraged corporation? I. current tax laws
II) corporate tax exclusion
III) bond indenture covenant
IV) state laws pertaining to retained earnings

Question

Quizplus · Accepted Answer

Bond indenture covenants often include restrictions on dividend payments to ensure that the company maintains enough cash to meet its debt obligations. State laws may also limit dividends to protect creditors by ensuring that dividends are paid out of retained earnings, not capital.

Which Two of the Following Tend to Limit the Amount