The cash flow to stockholders must be positive when:
A)the dividends paid are less than the amount of net new equity raised.
B)the net sale of common stock exceeds the amount of dividends paid.
C)no income is distributed but new shares of stock are sold.
D)the cash flow from assets is positive and exceeds the cash flow to creditors.
E)both the cash flow to assets and the cash flow to creditors are positive.

Question

Quizplus · Accepted Answer

The cash flow to stockholders is positive when the cash flow from assets is positive and exceeds the cash flow to creditors, as this indicates that there is excess cash available to distribute to stockholders after meeting obligations to creditors.

The Cash Flow to Stockholders Must Be Positive When