Company management, especially in established corporations, will formulate a policy that is often called a distribution policy or a payout policy. This policy specifies what management intends to do with the company’s profits and any free cash flow (FCF) generated by the firm. The objective is to create a distribution policy that increases the value of the firm and maximizes the wealth of the firm’s shareholders. Which of the following factors affects management’s decisions regarding a firm’s distribution policy? Check all that apply. a. The level of retained earnings to maintain.
b. The level of reinvestment in Treasury bills and bonds.
c. The method of payment to shareholders—cash or stocks.
d. The level of payout to shareholders that is sustainable in the future