"Restrictions on dividend payments based on the liquidity postion of the firm." Based on your understanding of...

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Finance

"Restrictions on dividend payments based on the liquiditypostion of the firm."
Based on your understanding of constraints on dividend payments,identify the type of constraint this condition represents. Assumethat all other factors held constant.
A. availability of cash B. Impairment of capital rule C. Penaltytax

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4.1 Ratings (512 Votes)

Dividend can be distributed when the Company is running in profits but dividend mostly happens to be in cash so here comes the concept of liquidity Liquidity represents Cash position of the Company See Answer

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"Restrictions on dividend payments based on the liquiditypostion of the firm."Based on your understanding of constraints on dividend payments,identify the type of constraint this condition represents. Assumethat all other factors held constant.A. availability of cash B. Impairment of capital rule C. Penaltytax