Question

looking at dividends in regards to warrants, if dividends are not issued, can a company exercise "dividends in arrears"? Class, if you were a shareholder, what would you pay close attention to in regards to dividend payouts? Do you feel having "dividends in arrears" is important to you as a shareholder? Why or why not

Answer 1

A COMPANY MAY HAVE "DIVIDENDS IN ARREARS" IN RELATION TO CUMULATIVE PREFFERED STOCK. IF A A COMPANY IS NOT ISSUING DIVIDENDS IN CURRENT YEAR, MAY PAY DIVIDENDS IN ARREAR FOR THE YEAR AND EVEN IF IT WANT TO PAY DIVIDENDS FOR CURRENT YEAR IT HAS TO PAY DIVIDENDS IN ARREAR FIRST.

IF A COMPANY ISSUES WARRANT INSTEAD OF PAYMENT OF DIVIDENDS THIS MEANS ISSUING A DOCUMENT ORDERING THE PAYMENT TO ONE BY ANOTHER. THE PRICE STATED ON WARRANT IS EXERCISE PRICE . IN THIS CASE COMPANY CAN EXERCISE DIVIDENDS IN ARREARS.

IF WE ARE A SHARE HOLDER WE WILL PAY A CLOSE ATTENTION TO DIVIDENDS PAYOUT OF THE COMPANY BECAUSE WE INVEST FOR RETURNS AND IF TALK ABOUT LONG TERM FOR GROWTH IN THE VALUE OF SHARES. SO THE DIVIDEND PAYOUT RATIO OF A COMPANY IS VERY IMPORTANT MATTER FOR A SHAREHOLDER.NOT ONLY BECAUSE OF SHORT TERM GAIN IN FORM OF DIVIDEND PAYMENTS BUT ALSO IT TELL US THE RETAINED EARNINGS OF THE COMPANY WHICH IS USED AS INTERNAL RESOURCE IN THE COMPANY FOR GROWTH SO WE CAN ESTIMATE THE GROWTH.AND COMPUTE THE CAPITAL GAIN.