What term refers to earnings distributed to stockholders?

What term refers to earnings distributed to stockholders?

• A. Investments
• B. Profits
• C. Dividends
• D. Taxes

Answer: (C)

Dividends are earnings distributed to stockholders. They are the payments a corporation makes to its shareholders, typically drawn from after-tax profits, and can be cash per share or, occasionally, additional shares. Not every company pays dividends—many choose to reinvest profits to fund growth. By contrast, profits describe the company’s earnings themselves, before any distribution decisions. Taxes relate to how those earnings or distributions are taxed, not the act of distributing earnings. Investments refer to using money to acquire assets, not distributions to owners.

Dividends are earnings distributed to stockholders. They are the payments a corporation makes to its shareholders, typically drawn from after-tax profits, and can be cash per share or, occasionally, additional shares. Not every company pays dividends—many choose to reinvest profits to fund growth. By contrast, profits describe the company’s earnings themselves, before any distribution decisions. Taxes relate to how those earnings or distributions are taxed, not the act of distributing earnings. Investments refer to using money to acquire assets, not distributions to owners.