ACCA FM · Chapter 10 · Question 10 of 11
What is a scrip dividend?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) A dividend paid by issuing additional shares to shareholders instead of cash
Explanation
A scrip dividend gives shareholders new shares in place of a cash dividend, usually at their option. It allows the company to retain cash for investment while still rewarding shareholders. It slightly reduces gearing because equity increases without any cash outflow.
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