Dividends are periodic cash flows given out by the firm to shareholders. It is not necessary for a firm to declare dividends but mature firms tend to pay out dividends.

Question

Quizplus · Accepted Answer

This statement is true. Dividends are not mandatory and it is up to the discretion of the firm's management to declare and pay out dividends to shareholders. However, mature firms with stable earnings tend to pay out regular dividends as a way to reward shareholders and maintain their loyalty.

Dividends Are Periodic Cash Flows Given Out by the Firm