RE:RE:RE:RE:RE:Dividend of 4 cents declared.Mauriceopp wrote: tinytot wrote: Here's a little hypothetical:
You're a one man consulting company. You buy a computer for $10 mil cash, you can depreciate it at $2 mil per year.
Your consulting sales income for the year is $1 mil.
All your cash costs for the year are $0.2 mil.
Your EBIDTA is $800,000
Using accrual accounting, your loss is $1.2 mil.
Can you afford a dividend? Should you?
Can you afford to, You have the cash. Should you? In this case you took a loan with a balloon payment to get cash. You then buy that computer with that cash. Instead of paying off the loan you buy a ferrari and pay that off with the cash from fees you earn. If you don't have a profit in the end you can't pay back that loan. The loan comes due and they lender forcloses on your computer and all your other assets.Should you have bought the ferrari?.
My Hypathetical:
Your
You're making good money with a very secure future.
You're not only not having any problem paying high interest on the loan but you are reducing it at the maximum rate allowable.
And guess what? That car you bought wasn't a Ferrari, but a Prius. (Your hypothetical only tracks reality so far.)
And the way things look, you can trade it for a Tesla next year.