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What do companies do with profits?


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It's a straight forward enough question. What do you think companies do with profits?

 

Put them in a huge pile a stare at them whilst cackling with an evil glint in their eye.

Then they sit around in their corporation rooms being all corporationy and cackling some more.

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It's a straight forward enough question. What do you think companies do with profits?

 

If you mean true profit after tax etc, then it is distributed amongst the directors/share holders by way of dividends.

 

Each year, your profit is calculated and the tax man gets 20% as corp tax and as of April he gets another slice with a 7.5% tax on the dividends that go to the directors/share holders.

 

---------- Post added 16-01-2016 at 18:27 ----------

 

Pay shareholders, invest in new products, pay tax.

 

That last one is just a joke.

 

investment is not profit as its tax deductible.

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If you mean true profit after tax etc, then it is distributed amongst the directors/share holders by way of dividends.

 

Not always. A company can decide to retain the profit amd use it to pay off debts, invest, improve its finances, cash joldings, buy back shares etc. A company like Apple is notorious for having grown its share value by vert limited divident payments and having a massive cash warchest.

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