Which of the following statements is most likely to be a reason for choosing the scrip dividend?

A company is deciding whether to offer a scrip dividend or a cash dividend to its shareholders.

Although the company has excellent long-term growth prospects, it is experiencing short-term profit and cash flow problems.

Which of the following statements is most likely to be a reason for choosing the scrip dividend?
A . It is a way of raising additional finance to promote future growth.
B . It is a way of increasing earnings per share.
C . It is a way of encouraging shareholders to allow cash to be retained in the business.
D . It is a way of increasing dividend per share.

View Answer

Answer: C