LentzTucker Inc. reported a net income of $3 million but paid no dividends to its shareholders. The shareholders should sue the company for failure to provide a return on their equity investment.

Question

Lentz­Tucker Inc. reported a net income of $3 million but paid no dividends to its shareholders. The shareholders should sue the company for failure to provide a return on their equity investment.

Quizplus · Accepted Answer

The company is not legally obligated to pay dividends to its shareholders, and the shareholders cannot sue for failure to receive a return on their investment. They may choose to sell their shares to realize a return or continue to hold them in anticipation of future profits or dividends.

Lentz­Tucker Inc

LentzTucker Inc