Unformatted text preview: preferred stockholder has a Liquidation Preference of whatever the corporation has an asset to. What are the different types of dividends that corporations may issue? When should a corporation pay dividends? Would you prefer a stock dividend or a cash dividend? Explain why. There are four different types of dividends that a corporation may issue. They are cash, property, script (promissory note to pay cash), or stock. A corporation should pay a dividend when they have the money in the corporations cash balance. I think that I would prefer a cash dividend rather than a stock dividend. The reason for this is that if you were to get paid a stock dividend it’s like the company is saying here is more stock for you that we will never pay to you in the long run. For example, it’s like asking for two pieces of pie and having your host take one piece of pie and cut it into two smaller pieces. You are not better off, but you got your two pieces of pie....
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This note was uploaded on 03/28/2011 for the course ACCT 349 taught by Professor Goyal during the Spring '09 term at University of Phoenix.
- Spring '09
- Financial Accounting