In 2012,W Co had a dividend yield ratio of 0.3% and J.C.Co.reported a yield of 6.9%. What is the most likely reason for W Co's relatively low dividend yield in comparison to J.C.Co's ratio?
A)W Co is paying little in dividends because it continues to grow through expansion of store locations financed by operations.
B)W Co does not generate sufficient cash from operations to be able to pay a dividend.
C)W Co does not generate sufficient operating profit to support declaring a dividend.
D)W Co does not have sufficient retained earnings to support declaring a dividend.

Question

Quizplus · Accepted Answer

W Co's low dividend yield ratio could be due to the fact that they are using their profits to fund expansion rather than paying out dividends to shareholders. J.C.Co may have a higher dividend yield ratio because they are a more established company with less need for expansion and can afford to pay out a larger portion of their profits as dividends.

In 2012,W Co Had a Dividend Yield Ratio of 0