IF a "typical" fit reports $20 million of retained earnings on its balance sheets, could its directors declare a $20 million cash dividend without having any qualms about what they were doing
belongs to book: FUNDAMENTALS OF FINANCIAL MANAGEMENT|Eugene F.Brigham, Joel F. Houston|12th Edition| Chapter number:3| Question number:3
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Accounting
No, because the $20 million of retained earnings would probably not be held as cash. The retained earnings figure represents the reinvestment of earnings by the firm over its life. Consequently, the $20 million would be an investment in all of the firm's assets.
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