In today's lesson of Finance 101, we shall discuss when to pay a dividend.
Question: If your company has a net equity of -40 bn $, and just posted an annual loss of 40 bn $, would you pay a dividend?
Well, if you're GM, then apparently you do go ahead and pay a dividend: GM paid its regular quarterly dividend in 2/08 and 5/08, and didn't even cut the amount. And as late as 6/08, people were still speculating that dividend payments would continue.
I noticed this by coincidence and at first refused to believe it. How can a company in such shape even be allowed to pay a dividend? Under German law, a limited liability company can only pay a dividend if its net equity exceeds the paid-up-capital. If net equity becomes negative, it needs to convincingly show that it has a future as a going concern, or otherwise apply for insolvency proceedings. But America is once more different.
By the way, Ford stopped paying dividend back in 2006.
Shaun Rein on the TSM
vor 10 Monaten
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AntwortenLöschenDanke für die Blumen! "Verlorene Generation" braucht sich aber auch nicht zu verstecken...
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