At the annual shareholders' meeting, the president of the Sante Corporation makes the following statement: "The net income for the year, after taxes, was $1,096,000. The directors have decided that the corporation can afford to distribute only $500,000 as a cash dividend." These two statements are:

Net Income determined the maximum of cash dividends that can be paid

None of the other alternatives are correct

Cash available determined the maximum of cash dividends that can be declared

Compatible

Incompatible