Which of the Following Statements Is NOT True About Dividend

question 30

Multiple Choice

Which of the following statements is NOT true about dividend payments?

• A) Many companies distribute between 30 and 70 percent of their profits to shareholders.
• B) Some firms, especially fast-growing companies, do not pay dividends.
• C) Many fast-growing companies use cash earnings for expanding the company so that future earnings can grow even faster.
• D) During unprofitable years, companies are still required by law to pay dividends to their stockholders.
• E) Dividend payments are made to stockholders on a per-share basis.

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Definitions:

Variable Costs

Costs that change in proportion to the level of activity or volume of production in a business.

Total Fixed Costs

The total of all expenses that stay the same no matter the amount of production or output.

Average Total Costs

The total cost of production (fixed and variable costs combined) divided by the number of units produced; it shows the cost per unit of output.

Variable Costs

Costs that change in proportion to the level of output in the production process.