The Residual Dividend Approach Is Defined as the Policy of Paying

question 43

Multiple Choice

The residual dividend approach is defined as the policy of paying dividends:

• A) Based on the operating cash flows which remain after all expenses and taxes have been paid.
• B) Only after the investment needs of the firm are met while maintaining a constant debt- equity ratio.
• C) Equal to the after-tax proceeds from the sale of a portion of the business entity.
• D) Only after all the cash needs of the firm have been met and the debt-equity ratio has been reduced to zero.
• E) Only if excess funds remain after the net working capital requirements of the firm have been met while maintaining a constant debt-equity ratio.

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