Critically discuss the advantages of scrip dividends from the point of view of the companyand the shareholders,ensuring the response draws upon relevant academicresearch within this highly topical area of financial management.
(a) Lexbel PLCgenerates earnings after tax (PAT) of 20 per cent on shareholders’ funds. Its currentcapital structure is as follows:£Ordinary shares of 25p each300,000Reserves 400,000700,000The board of Lexbel PLCwishes to raise £180,000 from a right issue to expand existing operations. Its return on shareholders’ funds will be unchanged. The current ex-dividend market price of Lexbel […]