Because Retained Earnings Are a Form of Internal Financing, the Dividend

question 47

True/False

Because retained earnings are a form of internal financing, the dividend decision can significantly affect the firm's external financing requirements.

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Definitions:

Contingency

An existing condition or situation whose outcome is uncertain and will be confirmed only upon the occurrence or non-occurrence of one or more uncertain future events.

IFRS

A global set of accounting standards formulated by the International Accounting Standards Board (IASB), known as International Financial Reporting Standards.

Payroll Taxes

Charges levied on both employers and employees, typically determined based on a percentage of what employers pay to their workers as wages.