Question

If a "typical" firm reports $20 million of retained earnings on its balance sheet, could its directors declare a $20 million cash dividend without having any qualms about what they were doing? Explain your answer.

Answer 1

Answer:

it cannot pay a $20 million Cash dividend

Explanation:

given data

retained earning = $20 million

cash dividend  = $20 million

solution

declare a $20 million cash dividend is not having any of qualm

so here retained earnings of $ $20 million probably will not be held as a cash

so here retained earning figure is representing the reinvestment of an earning by  firm over life

so that consequently  $20 million will be an investment in all the firm asset