Suppose a firm is facing the possibility of a necessary dividend rate cut because of poor economic conditions. Suppose further that you are a member of the firm’s board of directors. How would you respond to the argument of another board member that the firm should publicly deny the possibility of such a cut until the board has decided that the cut is an unavoidable necessity? I know there are some talented board members in this class!
Why is a pro forma analysis an important prerequisite to choosing a capital structure? If you were CFO would you require having one for your company large capital expenditures?
All companies should make all their business decisions with their shareholders in mind. Hiding a truth from shareholders is not a