Fyloff, Inc

question 52

Essay

Fyloff, Inc. would like to pay a dividend to its shareholders. It has only been in business a few years and does not yet have any retained earnings. However, it has a new product, which is breaking all sales records. This quarter, it anticipates about $3 million in earned surplus. It should be able to pay all of its bills as they become due. Under which of the following tests would Fyloff be able to pay a dividend? Explain each test.
a. Earned surplus test
b. Surplus test
c. Net asset test

---

Definitions:

Data-driven Decision Making

The practice of basing decisions on analysis of data rather than intuition or personal experience.

Financial Operations

Refers to the management of money and investment for an organization, including budgeting, billing, and financial planning.

Gender Balance

The equal representation and participation of different genders in an organization, activity, or decision-making process.

Generational Shift

The change in demographics within the workforce as older generations retire and younger generations enter, bringing different values, expectations, and work styles.