A dividend payment on preferred stock:
A) can never be omitted if the company is earning a profit.
B) cannot be omitted even at the discretion of the board of directors.
C) is automatically omitted if the company realizes a loss.
D) can be omitted at the discretion of the board of directors.
E) increases when the company has a profit and decreases when the company has a loss.

Question

Quizplus · Accepted Answer

Dividend payments on preferred stock can be omitted at the discretion of the board of directors. While it is less common for preferred dividend payments to be skipped compared to common stock dividends, it is still possible under certain circumstances such as financial difficulties or a need to conserve cash.

A Dividend Payment on Preferred Stock