Harbor Company reported net income of $1.7 million for the year ending December 31, 2004. On January 27, 2005, the board of directors met and decided that each of the firm’s 400,000 outstanding common shares should receive a dividend of $0.65. The board voted to distribute the dividend on March 15 to those stockholders who owned the shares as of February 10.
a. Identify the date of declaration, the date of record, and the date of payment.
b. What percentage of net income was distributed in dividends?
c. Why do you suppose the company did not distribute 100% of net income as dividends? What else can companies do with profits?