The Use of Stock Dividends by Industries in the Growth

question 14

Multiple Choice

The use of stock dividends by industries in the growth stage is for what purpose?

• A)To dilute the ownership of current holders of equity
• B)To maintain cash to pay off creditors
• C)To signal to investors that the company is profitable
• D)Because cash dividends would signal to investors that the company has reached the crossover point

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Definitions:

Net Income

The amount of profit a company generates after all expenses, taxes, and costs have been subtracted from its total revenue.

Cash Dividends

Dividends paid out in the form of cash from a corporation's earnings to its shareholders.

Dividends Paid

Payments made by a corporation to its shareholders, usually derived from the company's profits.

Assets

Economic resources or owned items of value, such as cash, property, equipment, that an individual, company, or country owns or controls with the expectation that it will provide future benefit.