business and finance question

timer Asked: Jul 23rd, 2014
account_balance_wallet $5

Question Description

While most companies pay dividends only during profitable years, is it a requirement that a company have net income in a given year in order to declare dividends?  Why or why not?

Tutor Answer

School: UT Austin

dividends usually are corporate cash flow that organizations pass around for their investors. There are a number involving explanations why the business could possibly choose to pass a few of it's cash flow about because dividends. Additionally, there are many explanations why it may choose to reinvest most of it's cash flow back to the company.

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