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2014 April

Discussion in 'CB1' started by Robert, Aug 16, 2019.

  1. Robert

    Robert Very Active Member

    2014 April no 5
    A company has a substantial cash balance for which it has no immediate use. Which of the following would NOT be a valid reason for it to release this cash to shareholders by means of a repurchase rather than a dividend?


    A potential tax advantages to the company
    B potential tax advantages to the shareholders
    C provision of an exit opportunity for a provider of startup equity
    D the repurchase can be scheduled for any time of year

    can i know why the answer is A why C is not suitable as the answer ?
     
    Robert, Aug 16, 2019
    #1
  2. Robert

    Robert Very Active Member

    sorry it is *2010 April no 5
     
    Robert, Aug 16, 2019
    #2
  3. Lynn Birchall

    Lynn Birchall ActEd Tutor Staff Member

    It's A because neither of these means of returning cash to shareholders affects a company's taxable profits.
     
    Lynn Birchall, Aug 19, 2019
    #3

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