Restrictions on dividend payments based on the liquidity postion of the firm.

Based on your understanding of constraints on dividend payments, identify the type of constraint this condition represents. Assume that all other factors held constant.

IN the table, identify which factors tend to favor high or low payout ratios:

Taxes on capital gains are deferred until the capital gain is realized, but taxes on dividends are due in the year in which they are received.

A firm has an established credit line for access to external sources of funding

Due to inflationary environment, a firm has to increase cash balances to meet the rising of accounts payable and other short-term liabilities.

Having the ability to accelerate or delay projects makes it __for a firm to adhere to a stable dividend policy? A. Harder B. Easier

If management is concerned with keeping control of the company, it will be likely to retain ___ earnings than it otherwise would to avoid diluting control by issuing new stock to raise capital. A. more or B. Less