Question

The board of directors of Testa Incorporated has decided that they would like to declare a $400,000 cash dividend at some point in the near future. The company currently has Retained Earnings of $2,419,000 and a Cash balance of $827,000. They also have current liabilities totaling $436,000. What is missing in order for Testa to be able to pay a cash dividend

Answer 1

Answer:

Approval and the declaration by the board of directors

Explanation:

The three key requirement for a company to pay dividends are adequate retained earnings , adequate cash and the declaration and approval of the board of directors.

Looking at the provided information for Tesla incorporation ,what is missing is the Approval of the board through declaration of payment.

It was still an intention , so the declaration is still necessary for payment. Other conditions like adequate cash balance and retained earning are are already met