Remedy for under capitalization is to reduce the face value of the shares. This will ' Reduce dividend per share though EPS shall remain unchanged". How is this possible?
Please explain.
Regards,
Devendra K
1 Replies
ACCOUNTANT
(Student)
(559 Points)
Replied 24 October 2011
May be ultimate effect posed towards the indistributable profits of the company........there by Leaving no net change in the Earnings of the company........though distributable profits which are used for declaring dividend are considerably reduced............
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