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

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 55
Topic #: 5

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?

AIt is a way of raising additional finance to promote future growth.

BIt is a way of increasing earnings per share.

CIt is a way of encouraging shareholders to allow cash to be retained in the business.

DIt is a way of increasing dividend per share.

Show Suggested Answer

Suggested Answer: C

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

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Franklyn

4 months ago

Surprised they’d choose scrip over cash with profit issues!

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Phillip

4 months ago

I think it helps with earnings per share too!

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Alayna

4 months ago

Not sure about that, isn't it just a way to avoid paying cash?

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Lindsey

4 months ago

Totally agree, it keeps cash in the business!

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Gladis

4 months ago

Scrip dividends can help raise funds for growth.

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Olga

5 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

5 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

5 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

5 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

5 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

5 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

5 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

5 months ago

Preserving employment sounds good for public image, but I'm unsure if it really affects competition authority decisions.

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