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>>Companies borrow money to pay dividends too. The very definition of "dividends" is precisely distributing profits to it's shareholders.
by rumanator 7y ago
>>Companies borrow money to pay dividends too.
The very definition of "dividends" is precisely distributing profits to it's shareholders.
- umanwizard 7y agoWell, all I can say is get a new dictionary, because companies really can and do borrow money to pay dividends. Of course, any bailout would have to have terms preventing this, and it should prevent immediately spending it on stock buybacks too.
- rumanator 7y ago> Well, all I can say is get a new dictionary, Great umanwizard, it's a good thing you're here to tell us that Cambridge university is wrong! After all, what do they know about finance and economics? https://dictionary.cambridge.org/us/dictionary/english/dividend https://dictionary.cambridge.org/us/dictionary/english/divid...
- formercoder 7y agoNo, it’s retained earnings ending balance = retained earnings beginning balance + net income - dividends Nothing about dividends vs buybacks has to do with where the cash comes from.
- rumanator 7y agoNone of the elements of your equation reflects borrowed cash. In fact, you acknowledge that dividends are drawn from earnings. So what's your point?
- AnimalMuppet 7y agoNo, the definition is a payment from a company to stockholders that's labeled "dividend". I know of companies that were losing money that still paid dividends.
- robocat 7y agoThis is clearly false: there are plenty of value companies with high volatility of profits and low volatility of dividends. Certainly I have seen loss making companies still pay dividends.