Question

Not all cash a company generates will be returned to the investors. Which of the following will not reduce the amount of capital returned to the investors?

A. retained earnings

B. taxes

C. dividends

D. none of these will reduce the amount of capital returned to the investors.

Answer 1

C) dividends

Step-by-step explanation:

Taxes reduce the corporation's income and therefore it also reduces the amount of money returned to investors.

Retained earnings is the amount of net income left after dividends have been distributed and they are used by the corporation to finance new or existing projects. The higher the retained earnings the corporation needs, the lower the dividends it distributes.