Exercises BYP10-1 and BYP11-10 Essay Example | Topics and Well Written Essays - 1000 words

Exercises BYP10-1 and BYP11-10 - Essay ExampleWrite the press release convincing the armouryholders that the stock dividend is just as replete(p) as a money dividend, he orders. Just watch our stock rise when we announce the stock dividend it must be a good thing if that happens.There is nonhing unethical about President Mailors actions, as declaring dividends are at the sole discretion of the company. Moreover, Greenwood has paid out cash dividends for over 15 years, when the company was doing better in terms of cash as well as earnings. At the time of crisis, where there is only exuberant liquid assets to take care of day - to day operational activities, the decision taken by President Mailor is very reasonable.When stock dividends are declared, the stockholders are habituated additional stocks based on the number of stocks originally held by them. If this involves, adding new shares to the company, then the total number of stocks are increased however the value of the stock is reduced, so that the total stockholders equity remains the same. Hence a stock dividend increases the number of stocks whereas the total value of stockholder equity is unchanged.As a stockholder, a cash dividend is preferred, as it is paid out immediately and adds value to the stockholder. However a stock dividend is of lesser value to the stockholder, as it just increases the number of stocks held and does not add value immediately. The stock dividend appreciates only when the value of the company goes up in the future. But there is also a possibility of the companys value going down. Hence a cash dividend is more preferred by the