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A Number of Publicly Traded Firms Pay No Dividends Yet

question 62

Essay

A number of publicly traded firms pay no dividends yet investors are willing to buy shares in these firms.How is this possible? Does this violate our basic principle of stock valuation? Explain.


Definitions:

Current Ratio

A measurement indicating how well a business can cover its short-term debts with its available assets, made by dividing current assets by current liabilities.

Financial Statements

Official records that outline the financial activities and condition of a business, individual, or other entity.

Average Collection Period

The mean number of days a company waits to get payments from customers for products or services provided on credit.

Balance Sheet

A document showcasing a corporation's assets, obligations, and the equity held by shareholders on a specific date.

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