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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › International Enterprises (12/07)
Dear Sir,
In International Enterprises, part b, The divident capacity = 24m – 5.1m = 18.9m.
Why do we exclude 5.1m from the dividend capacity? The reduction in working capital may come from credit policy changes, process improvements, etc. then these changes generate cash. In my opinion this cash (5.1m) can be distributed to sharedholders as dividends. So dividend should be 24m. Please advise why in the solution 5.1m is excluded.
THanks,
DT
I agree with you and I feel the examiner was wrong about this (the examiner has changed twice since them 🙂 )