Response to the following problem:
MyTravel set to resume dividend MyTravel, the tour operator formerly known as Airtours, has marked a return to financial good health by signaling that it would resume dividend payments for the first time since it fell into financial difficulties in 2001. The group's improved performance was led by MyTravel's UK business, which has returned to growth after a dismal few years. The gains in UK performance offset declines at MyTravel's North American operations, which were hit by the effects of Hurricane Wilma. My Travel came close to collapse four years ago when a series of accounting errors and profit warnings caused the shares to tumble. But the tour operator has completed a long restructuring, overhauling its management, cutting costs and changing its revenue recognition policies. Yesterday it said that advance bookings for this summer were outperforming the market.
Q1; Comment on the following quote:
Limited companies can set a limit on the amount of debts that they will meet. They tend to have reserves of cash, as well as share capital and they can use these reserves to pay dividends to the shareholders. Many companies have preference as well as ordinary shares. The preference shares give a guaranteed dividend. The shares of many companies can be bought and sold on the Stock Exchange, and shareholders selling their shares can represent a useful source of new capital to the company.