Final answer:
No, a corporation is not legally obligated to pay dividends to its shareholders whenever it has made a profit. The decision to pay dividends is ultimately made by the corporation's board of directors.
Step-by-step explanation:
No, a corporation is not legally obligated to pay dividends to its shareholders whenever it has made a profit. While dividends are a common way for corporations to distribute profits to shareholders, it is not mandatory. The decision to pay dividends is ultimately made by the corporation's board of directors.
When a corporation earns profits, it has several options for how to use those profits. One option is to reinvest the profits back into the business for growth and expansion. Another option is to pay down debt or save the profits for future use. And finally, the corporation may choose to distribute some or all of the profits to shareholders in the form of dividends.
Dividends are typically paid as cash to shareholders, but they can also be paid in the form of additional shares of stock or other assets. The amount and frequency of dividends are determined by the corporation's board of directors and can vary from company to company. Some corporations may choose to pay regular dividends, while others may only pay dividends periodically or not at all.