Question

Cash dividends and treasury stock purchases ________. make more resources available to pay liabilities may be restricted as a way to lower federal income tax expense represent cash payments that are made to ensure higher reported profits may be limited by creditors to ensure that the company maintains a minimum level of stockholders' equity

Answer 1

Cash dividends and treasury stock purchases may be limited by creditors to ensure that the company maintains a minimum level of stockholders' equity.

The amount of stockholder's equity owned in a company will determine how much influence you have in that company. Owning more than 50% stock will basically make you the one that held the final decision regarding company's actions.