Assume that Company A is doing quite well and has healthy cash flows from operating activities. Its board of directors has decided to NOT pay any dividends to its shareholders for the foreseeable future. This is most likely because
A) the company wishes to reinvest its cash for future growth opportunities.
B) it would increase the company's debt to equity ratio.
C) it would reduce retained earnings.
D) because it would cause a mass selloff of the company's shares.

Question

Quizplus · Accepted Answer

The company likely wants to reinvest its cash into future growth opportunities, which is a common reason for not paying dividends despite having healthy cash flows.

Assume That Company a Is Doing Quite Well and Has