A company selling the stock often distributes profits by using?

depends on the company. A company could distribute profit by giving its employees a raise for example. Under the circumstances you mention with a company actually selling its stock though would most likely be to cut its losses or to make profit tangible. Profit isn't usable until you sell it so I'd think you'd sell your stock and use the profit for a variety of things (ex. turning losses into winners). Though I'm bringing up all these concepts, I'm a little confused about the circumstances of this question. What does your teacher want you to take away from this question? The best bet you have is to go over recent material and connect it to the current concept.

A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits ... Dividends can provide stable income and raise morale among shareholders. For the joint-stock company, paying dividends is not an expense; rather, it is the division of after-tax profits among shareholders.