As Long as a Firm Has a Positive Level of Retained

question 154

True/False

As long as a firm has a positive level of retained earnings,it can pay a dividend.

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Definitions:

Liquidation Surplus

The amount of money remaining after all liabilities and obligations of a liquidating entity have been settled, which is then distributed to shareholders.

Preference Shares

Shares that give holders preferential rights over common shareholders regarding dividends and assets distribution upon liquidation.

Ordinary Shares

Securities that represent ownership in a corporation, giving the holder voting rights and a share in the company's profits via dividends.

Deferred Creditor

An entity to whom a payment is owed but the payment is delayed or deferred to a future date.