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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.

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Corporate Fin Focused Approach
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ISBN: 9781285660516
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Publisher: Cengage
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  • In its most recent financial statements, Nessler Inc. reported $60 million of net income and $660 million of retained earnings. The previous retained earnings were $614 million. How much in dividends were paid to shareholders during the year? Assume that all dividends declared were actually paid. Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary. $
    the retained earnings on a balane sheet are $80,000. Without seeing the rest of hte balance sheet, can you conclue that stockholders shoudl be able to receive a divident in the amount of $80,000 cash from the business? Justify your answer
    Peters, Inc. wants to find out the maximum amount of cash dividends it can pay this year.  The company has 250,000 shares outstanding currently.  Its balance sheet is shown below:   Assets Cash                                                                          $        412,500 Accounts Receivable                                                        900,000 Fixed Assets                                                                      987,500                                                                                          $2,300,000    Liabilities and Shareholders’ Equity  Accounts Payable                                                         $  445,000  Long-term Payable                                                           280,000  Common Stock                                                                 600,000  Retained earnings                                                            975,000…
  • A firm has a market value equal to its book value. Currently, the firm has excess cash of $1,800 and other assets of $5,700. Equity is worth $7,500. The firm has 750 shares of stock outstanding and net income of $1,500. The firm has decided to spend all of its excess cash on a share repurchase program. How many shares of stock will be outstanding after the stock repurchase is completed?
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