One fine day, you and your friend chit chat over at tea stall and your friend asked for an financial advice. We always argue that company that pays high dividend meaning that company is doing well. In fact, it is always not the case because some don't pay the dividend, instead they keep the money for future use. Is there is a perfect payout to fit the shareholders? Please consider a few considerations like the nature of the business, which industry, future growth and expansion plan, capital gain, and many others. Decribe it to your understanding.

One fine day, you and your friend chit chat over at tea stall and your friend asked for an financial advice. We always argue that company that pays high dividend meaning that company is doing well. In fact, it is always not the case because some don't pay the dividend, instead they keep the money for future use. Is there is a perfect payout to fit the shareholders? Please consider a few considerations like the nature of the business, which industry, future growth and expansion plan, capital gain, and many others. Decribe it to your understanding.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter16: Statement Of Cash Flows

Section: Chapter Questions

Problem 3TP: Consider the dilemma you might someday face if you are the chief financial officer of a company that...

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Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a consultant and seek your advice. The company is desirous of comparing serval financial transactions and possible outcomes to assist in guiding its decision-making process. It is assumed that the company will be formed on January 1, 2021 and registered as Osbourne Corporation. The company’s charter will authorize 1,000,000 shares of common stock and 400,000, $100 par value, 5% cumulative preferred stock. Issued 45,500 shares of common stock. Stock has par value of 0.30 per share and was issued at $30.00 per share. Issued…
Steve Osbourne is considering opening a business, but the major decision faced is how to organize the business. Steve anticipates generating a massive profit during the first year and that the following years should be relatively profitable. Although he has enough to start the business now as a partnership, he believes cash flow may be an issue as the company grows. Steve believes that the corporate form of operation will be his best option and have hired you as a consultant and seek your advice. Answer the following questions for Steve. Is it true or false that corporations muse issue common stock, but may or may not decide to issue preferred stock? Is it true or false that all forms and classes of stock carry voting rights? Is it true of false that stock sold for amounts in excess of par value results in a gain reported on the income statement?