One reason why small business concerns have very low dividend payout ratios is that
A)the firm usually is low on cash
B)the firm needs funds for taxes
C)the firm needs the funds to finance growth
D)the small firm prefers stock offerings

Question

Quizplus · Accepted Answer

Small businesses usually have a high need for funds to finance growth and expansion. Therefore, they prefer to retain earnings rather than pay them out as dividends. This results in low dividend payout ratios. Options A and B are not necessarily applicable to all small businesses, and D is usually not a preferred option for most small businesses.

One Reason Why Small Business Concerns Have Very Low Dividend