One Reason Why Small Business Concerns Have Very Low Dividend

question 61

Multiple Choice

One reason why small business concerns have very low dividend payout ratios is that the firm ____.

• A) is usually low on cash
• B) needs funds for taxes
• C) needs the funds to finance growth
• D) prefers stock offerings

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and efficiency.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or a business's operating cycle, whichever is longer.

Current Liabilities

Obligations or debts due for payment within one year.

Current Ratio

A financial ratio indicating how well a company can settle short-term debts with its available assets.