Question

Rhombus corp. is a rapidly growing company that just experienced a very profitable quarter. the company's board of directors has decided not to pay dividends to common stockholders. this suggests that:

Answer 1

This shows that the board has decided to re-invest the profits in the business instead of paying it to common shareholders. This is one of the drawbacks of owning common stock in comparison to preferred stock. Dividends and other company earnings are not always shared with the stockholder.