Your firm successfully issued new debt last year, but the debt carries covenants. Specifically, you can only
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(Current Assets−Inventory)/Current Liabilities of 1.2. Your net income this year was $69.6 million. Your cash is $10.5 million, your receivables are $7.6 million, and your inventory is $4.6 million. You have current liabilities of $19.1 million. What is the maximum dividend you could pay (in cash and in stock) this year and still comply with your covenants?
(Round to one decimal place.) The maximum dividend would be $___ million.
Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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