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

CIMA F3 Question Answer

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?

It is a way of raising additional finance to promote future growth.

It is a way of increasing earnings per share.

It is a way of encouraging shareholders to allow cash to be retained in the business.

It is a way of increasing dividend per share.

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