Question 7 of 36 200 points If the cash flow to stockholders

Question 7 (of 36) 2.00 points If the cash flow to stockholders is positive then we know that O The amount of the sale of common stock exceeded the amount of dividends paid O Both the cash flow to assets and the cash flow to creditors must be negative O Both the cash flow to assets and the cash flow to creditors must be positive. O No dividends were distributed, but new shares of stock were sold O The dividends paid exceeded the net new equity raised 2018

Solution

The correct answer would be the last option or The dividends paid exceeded the net new equity raised.

Cash flow to Stockholders - It can be defined as the amount of Cash the company pays to its stockholders in the form of dividends net of the issue proceeds of equity.

When the dividends paid by the company to the stockholders are reduced by the amount of money that the stockholders have to pay when they subscribe to shares of the company it would represent Cash Flow to Stockholders. Thus a Positive Cash flow to stockholders would be in such a situation when the dividends paid to the stockholders would exceed the net new equity raised.