Profit-sharing plans may be beneficial when used to:

Question

Quizplus · Accepted Answer

Profit-sharing plans incentivize managers to make decisions that will benefit the company's profitability, as they will receive a portion of those profits. This can lead to better decision-making and ultimately benefit the company and its shareholders. However, it does not necessarily have an impact on corporate income taxes, divert financial resources from shareholders or reduce the payment of cash dividends.

Profit-Sharing Plans May Be Beneficial When Used To