Why aren’t any of the major stock companies splitting their stock or raising their dividends, i.e. Exxon, IBM
Answer: Umm … Exxon Mobil has increased its dividend every year for at least 25 years at an average rate of more than 5% per year, and they just increased it by 14% this past quarter!
Umm … IBM just increased its dividend at the end of April by 25%! It has more than doubled the dividend since 2006!!
Question: What effect does declaration and payment of cash dividend have on total liabilities and debt to equity ratio?
A. No effect on total liabilities, increase in debt to equity ratio
B.Increase in total liablities, increase in debt to equity ratio
C.No effect on total liabilities, decrease in debt to equity ratio
D.Decrease in total liabilities, decrease in debt to equity ratio
My answer is D. That is correct? I know B is not an answere.
Answer: I think it’s answer A.
The declaration of a cash dividend creates a liability, but then the payment of the dividend negates that liability.
The payment of the dividend also reduces equity, so debt to equity ratio increases.
100 Top Traders #62 (Season2) Blackrock Equity Dividend I (MADVX)
