Common stock dividends paid to stockholders are equal to the earnings available for common stockholders divided by the number of shares of common stock outstanding.

Question

Quizplus · Accepted Answer

While dividends are often calculated based on earnings available for common stockholders, the amount paid to each shareholder is determined by the board of directors and may not be equal to the calculated amount per share outstanding. Additionally, dividends may be skipped or reduced in favor of retaining earnings for future growth or paying off debt.

Common Stock Dividends Paid to Stockholders Are Equal to the Earnings