You Are the CFO of a Non-Dividend Paying Firm That

question 95

Essay

You are the CFO of a non-dividend paying firm that currently has excess cash reserves.You are preparing for an internal management meeting where dividends are on the agenda.You know that the CEO favors the commencement of a dividend program.You,however,oppose any dividend plan at this time.Write a good argument that you can use in the meeting to support your position.

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Definitions:

Materials Purchases

The total cost of raw materials bought by a company for use in its manufacturing process during a specific period.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are an integral part of the finished product.

Production Budget

A financial plan that outlines the expected production levels of a company based on projected sales, inventory policies, and capacity constraints.

Cash Collections

The total amount of money received from customers or clients for goods or services provided.