To determine whether a company's operations are covering its dividend payments,it is best to focus on which of the following sections of the statement of cash flows?
A)Operating activities
B)Financing activities
C)Investing activities and financing activities
D)Operating activities and investing activities

Question

Quizplus · Accepted Answer

The operating activities section of the statement of cash flows provides information on whether a company's cash flows from its core business operations are sufficient to cover its dividend payments. This section includes information on a company's net income, as well as any adjustments for non-cash expenses and working capital changes. If the net cash inflow from operating activities is positive and sufficient to cover dividend payments, then the company's operations are likely covering its dividends.

To Determine Whether a Company's Operations Are Covering Its Dividend