Before a Company Can Pay Dividends to the Common Shareholders

question 4

Multiple Choice

Before a company can pay dividends to the common shareholders, the owners of non-cumulative preferred shares must receive:

• A) dividends in arrears, but not the current year's dividends
• B) the current year's dividend, but not dividends in arrears
• C) all dividends in arrears plus the current year's dividend
• D) neither the current year's dividends nor dividends in arrears