If dividends begin to exceed the cash generated from operating activities, it could imply that the business is about to liquidate.

Question

Quizplus · Accepted Answer

If dividends exceed cash generated from operating activities, it means that the company is using cash from other sources such as selling assets or borrowing money to pay dividends. This is not sustainable in the long run and could lead to financial distress, including the possibility of liquidation.

If Dividends Begin to Exceed the Cash Generated from Operating