Assume Company A has been paying out consistent dividends over the past 40 years. This fiscal year, the company reports a sharp decline in the dividend it plans to pay out. The most likely reaction of the market will be:

Answer

Ring Station Company began business on January 1 and immediately issued 500,000 shares of its $1 par value common stock for $8,000,000. At the end of the year it paid $400,000 in cash dividends. In midyear, the firm bought back some of its own shares. The company reports the following additional information at December 31: Net income $1,750,000 Common stock $500,000 Retained earnings beginning of year $0 Common shares authorized 1,000,000 Shares outstanding at year end 300,000 Calculate the Retained Earnings account balance as of December 31.

A.

Company A