Question

A company that pays all its earnings out to shareholders in the form of dividends is frequently referred to as a ________.

Multiple Choice

• Market follower.

• Mature company.

• Liquidating company.

• Cash cow company.

• All-equity company.

Answer 1

The correct option is option B ,  a Mature company.

A mature company is one in which the growth slows down and so due to the fewer growth opportunities available, these companies pay out all their earnings as dividends.

Liquidating company means a company which is winding up its business and selling if it's assets.

All equity company is one which is entirely financed with equity, as the source of capital.

Cash cow company is one which has a large share of the market and requires little investment.