What are the factors affecting dividend?
Top 9 Factors Affecting the Dividend Policy of a Company
- Factor # 1. Maintenance of Reserves:
- Factor # 2. Existence of Earned Surplus:
- Factor # 3. Cash Needs of a Company:
- Factor # 4. Need for Growth and Expansion:
- Factor # 5. Steady and Stable Dividend Policy:
- Factor # 6. …
- Factor # 7. …
- Factor # 8.
What are the factors which affect the dividend policy of a company?
There are several factors which affect dividend policy, the most important of which are the following: (a) legal rules, (b) liquidity position, (c) the need to pay off debt, (d) restrictions in debt contract, (e) rate of expansion of assets, (f) profit rate, (g) stability of earnings, (h) access to capital markets, (i) …
Which of the following is a factor affecting dividend decision?
Factors affecting the dividend decision: Amount of Earnings: Amount of dividend paid by a company depends on the company’s current and past earnings. A company with high earning is in a better position to pay dividends and vice versa.
What are the six factors that affect dividend policy?
There are six main factors affecting the dividend policy of a firm. These are legal constraints, contractual constraints, internal constraints, growth prospects of a firm, owner considerations, and market considerations.
What are the objectives of dividend policy?
The most important objective of dividend policy is the improvement of the financial health of the company. This objective also takes into consideration shareholder’s wealth as the shareholder of the company plays a very important role in the company’s growth.
What do you understand dividend decisions?
Dividend decision determines the division of earnings between payments to shareholders and retained earnings. The Dividend Decision, in Corporate finance, is a decision made by the directors of a company about the amount and timing of any cash payments made to the company’s stockholders.
What are dividend decisions mention any four factors that affect dividend?
(i) Stability of dividend (ii) Shareholders’preference. (iii) Legal constraints (iv) Access to capital market. Explain the following as factors affecting dividend decision. (i) Stability of earnings (ii) Growth opportunities. (iii) Cash Flow position (iv) Taxation policy.
What is the main determinant of dividend decision?
Some of the most important determinants of dividend policy are: (i) Type of Industry (ii) Age of Corporation (iii) Extent of share distribution (iv) Need for additional Capital (v) Business Cycles (vi) Changes in Government Policies (vii) Trends of profits (vii) Trends of profits (viii) Taxation policy (ix) Future …
What are the advantage factors influencing dividend policy?
The expected dividend payout is influenced by many factors such as after tax earnings, availability of cash, shareholders expectation, expected future earnings, liquidity, leverage, return on investment, industry norms as well as future earnings.