MGAB02H3 Study Guide - Final Guide: Income Statement, Retained Earnings

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Utsc mgab02 case 6 notes: role: You are playing the role of a financial consultant. His objective is to make sure that the interests of the shareholder is being looked after and also the employees are continuously motivated. He also want to ensure that the bank covenant is complied: shareholders of abc the main objective for this group of users will be to maximize their return on investments. Since the company is tight for cash and abc would still like to maintain an issuance of some form of dividend for the shareholder, issuing stock dividend is probably a good option. The stock dividend results in a decrease in retained earnings and an increase of the same amount in share capital with no change in total shareholders" equity. There is no change in total assets and no change in total liabilities and shareholders" equity.

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