Question

If a company not generating enough cash from operating then how will it pay for capital expenditures and dividends?

Answer 1

If Company is not generating enough cash from operating activities to pay for its capital expenditure and dividends it has to generate cash from financing activities to pay. Following are some of the ways how it generates cash to pay capital expenditure and dividends.

· A Company can pay for capital expenditure and dividend from accumulated cash balance

· Borrowing from bank

· Issue of bonds payable

· Issue of long term debt

· Issue of notes payable

· Issue of preferred stock

· Issue of common stock