XYZ Limited is a company dealing in auto products. The company is earning high profits but is short on cash, so it has decided to declare less dividends in the current financial year.
Identify the factor related to dividend decision being described in the above lines.
Answer & explanation
Correct answer: option 4
The correct answer is option 4- Cash Flow Position.
Cash Flow Position is the factor related to dividend decision being described in the above lines.
Cash Flow Position: The payment of dividend involves an outflow of cash. A company may be earning profit but may be short on cash. Availability of enough cash in the company is necessary for declaration of dividend.