The following listed businesses each have differen policies concerning distributions to shareholders: North Plc pays all profits available for distribution to shareholders in the form of a cash dividend each year. South Plc has yet to pay any cash dividends to shareholders and has no plans to make dividend payments in the foreseeable future West Plc buys back shares from shareholders as an alternative to a dividend payment East Plc offers shareholders the choice of either a small but stable cash dividend or a scrip dividend each year Required: Discuss the advantages and disadvantages of each of the above policies.

The following listed businesses each have differen policies concerning distributions to shareholders: North Plc pays all profits available for distribution to shareholders in the form of a cash dividend each year. South Plc has yet to pay any cash dividends to shareholders and has no plans to make dividend payments in the foreseeable future West Plc buys back shares from shareholders as an alternative to a dividend payment East Plc offers shareholders the choice of either a small but stable cash dividend or a scrip dividend each year Required: Discuss the advantages and disadvantages of each of the above policies.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter15: Distributions To Shareholders: Dividends And Repurchases

Section: Chapter Questions

Problem 5Q: Indicate whether the following statements are true or false. If the statement is false, explain why....

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Bob Smith, The accountant of ABC Ltd. has been tasked with redeeming part of the shares outstanding for his corporation. Bob is unsure how he should charge the cost of the redemption to shareholder's equity accounts. Required:Explain to Bob how the cost should be charged to shareholder’s equity accounts. Please provide specific responses for the following circumstances:1) When the cost is lower than the average price per share.2) When the cost is higher than the average price per share.
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