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CIMAPRA19-F03-1 Exam - Topic 5 Question 55 Discussion

A company is deciding whether to offer a scrip dividend or a cash dividend to its shareholders.Although the company has excellent long-term growthprospects, it is experiencing short-term profit and cash flow problems.Which of the following statements is most likely to be a reason for choosing the scrip dividend?
C) It is a way of encouraging shareholders to allow cash to be retained in the business.
A) It is a way of raising additional finance to promote future growth.
B) It is a way of increasing earnings per share.
D) It is a way of increasing dividend per share.

CIMAPRA19-F03-1 Exam - Topic 5 Question 55 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 55
Topic #: 5
[All CIMAPRA19-F03-1 Questions]

A company is deciding whether to offer a scrip dividend or a cash dividend to its shareholders.

Although the company has excellent long-term growthprospects, it is experiencing short-term profit and cash flow problems.

Which of the following statements is most likely to be a reason for choosing the scrip dividend?

Show Suggested Answer Hide Answer
Suggested Answer: C

by Quentin at Aug 03, 2022, 03:59 AM

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Franklyn
10 months ago
Surprised they’d choose scrip over cash with profit issues!
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Phillip
10 months ago
I think it helps with earnings per share too!
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Alayna
10 months ago
Not sure about that, isn't it just a way to avoid paying cash?
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Lindsey
11 months ago
Totally agree, it keeps cash in the business!
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Gladis
11 months ago
Scrip dividends can help raise funds for growth.
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Olga
11 months ago
Increasing earnings per share sounds appealing, but I don't see how that directly relates to choosing a scrip dividend. I might go with option C instead.
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Alex
11 months ago
I practiced a similar question, and I feel like encouraging shareholders to keep cash in the business makes sense. So, I lean towards option C.
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Amber
11 months ago
I'm not entirely sure, but I remember something about scrip dividends being a way to raise finance. Maybe option A is correct?
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Olen
11 months ago
I think a scrip dividend might help the company retain cash, which is crucial given their short-term cash flow issues.
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Lizbeth
11 months ago
I think the key here is that it's an enterprise mail server, so I'll likely need the username and password in addition to the email settings. Gotta make sure I get all that right.
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Raelene
11 months ago
I think a prior period adjustment usually involves correcting an error from a previous reporting period, but I can't remember if it specifically needs to relate to GAAP violations.
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Viki
11 months ago
Key strategy: For these questions, focus on the specific organization type and how they typically manage provider payments. In this case, IPA-model DHMOs tend to capitate.
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Rikki
11 months ago
Preserving employment sounds good for public image, but I'm unsure if it really affects competition authority decisions.
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