By subtracting dividends paid to shareholders from the net income,managers are able to calculate which of the following?
A)a change in the cash balance in the firm's bank account
B)a change in retained earnings
C)a decrease in profit margins
D)an increase in net income

Question

Quizplus · Accepted Answer

Dividends paid to shareholders represent a distribution of profits to them. By subtracting dividends paid from net income, the remaining amount is what is left for the company and can be added back into retained earnings. Therefore, the calculation helps managers determine how much of the profits will be retained by the company instead of being distributed to shareholders.

By Subtracting Dividends Paid to Shareholders from the Net Income,managers