The Declaration of a Cash Dividend

question 119

Multiple Choice

The declaration of a cash dividend:

• A) increases shareholders' equity and reduces liabilities
• B) increases liabilities and increases shareholders' equity
• C) increases liabilities and decreases shareholders' equity
• D) reduces assets and increases liabilities

---

Definitions:

Return On Stockholders' Equity

A measure of a company's profitability that calculates how many dollars of profit are generated for each dollar of shareholders' equity.

Accounts Receivable Turnover

A financial ratio that measures how many times a company can turn its accounts receivable into cash within a specific period.

Sales

The exchange of goods or services for money, constituting the primary source of revenue for most businesses.

Accounts Receivable Turnover

A financial metric that measures the efficiency with which a company collects on its receivables or the credit it extends to customers by calculating the number of times receivables are turned over during a given period.