Discuss the process/steps involve when a company is planning to cut its dividend?

Expert Solution

Process/steps involve when a company is planning to cut its dividend.

Explanation:

The process or step to decrease dividends was not a strict rule. But based on the evaluation of the business or company money or cash situation and future capital investment or buying certain things requires for company. When firm spending on dividends continually for the past many years then dividends sents negative signal for cutting the dividend from a company balance sheet, Even after any other firm is spending or purchasing or paying a dividend and it has resolved to cut the dividend, usually it is done after the yearly earnings or periodically earnings when the company income statement was not good. but the company or firm needs the funds or amount for capital investment or payment in further or future. This thing will be analyzed by internal senior management of the company or firm or corporation and then he advises to cut dividends is presented to board, when they approve or permit this then a regular press release is announced by the organization where it describes in circumstances behind the cut in dividend and future promise of the firm. The organization also explains these conditions in its yearly general meeting.

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ekkarill92 answered 2 years ago

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