A firm can pay dividend only to the extent that it has sufficient cash to disburse a firm cant pay dividend when its earning are in accounts recievables or firms does not have adequate liquidity the consideration is
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Gross working capital refers to the firm's investment in current ... so, a firm should earn sufficient return from its operations. Earning a.
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A firm can pay a dividend to its shareholders only from the profit earned during the financial year after meeting all external obligations. It can’t pay a dividend from working capital which is the excess of current assets over current liabilities.
Also, there is no compulsory obligation that equity shareholders have to be paid dividends. Since, they elect the decision-makers of the company and the company has failed to generate enough profits, then the shareholder is penalized by less or no dividend.
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