Under which of the following circumstances is a company not likely to declare a higher dividend?
(a) When the cash flow position of the company is strong.
(b) When a company has a lucrative forthcoming business opportunity.
(c) None of the above.
(d) When the earnings of the company are high.
Answer (b) When a company has a lucrative forthcoming business opportunity.
Explanation: When a company has a high profit earning capability in a future project then the company is not likely to declare a high dividend. The retained earnings will become their investment for the future project.