Under which of the following circumstances is a company not likely to declare a higher dividend?

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Solution

(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.

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Similar questions

Companies with a higher growth potential are likely to

(a) pay lower dividends

(b) pay higher dividends

(d) none of the above

Q. Which type of companies can declare higher dividend?

Payment of fixed rate of dividend to preference shares may enable a company to declare higher rates of dividend for the equity shareholders in good times.

According to you, which company is in a position to declare high dividends?

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