Why is the cash position important when deciding to create a dividend policy?© BrainMass Inc. brainmass.com December 15, 2020, 8:31 pm ad1c9bdddf
Basically, this goes back to the old saying of, "cash is king." The first thing that investors are going to analyze when buying stock is the company's cash position, and if the company is creating a policy that pays out dividends, they better have the free cash flow available to back it up. If the company creates a dividend policy that is based on payouts, it shows that the company is ...
The solution discusses why the cash position important when deciding to create a dividend policy.