Which of the following affects the dividend decision of a company?

What are the factors affecting the dividend decisions?

The following are the some major factors which influence the dividend policy of the firm.

  • Legal requirements. There is no legal compulsion on the part of a company to distribute dividend. …
  • Firm’s liquidity position. …
  • Repayment need. …
  • Expected rate of return. …
  • Stability of earning.

What are the factors affecting dividend policy of a company?

The financial matters like trend of profit, existence of earned surplus, cash position, reaction of shareholders, economic policy of the nation, need for expansion, and nature of the enterprise trade cycle, age of the company, government taxation policy are determinants of dividend policy.

What do you mean by dividend decision explain factors affecting dividend decision?

Dividend decision relates to how much of the company’s net profit is to be distributed to the shareholders and how much of it should be retained in the business for meeting the investment requirements. This decision should be taken keeping in mind the overall objective of maximising shareholders’ wealth.

IT IS INTERESTING:  Question: What is investment appraisal?

What is meant by dividend decision state any three factors affecting dividend decision?

(i) Earning: The dividend is paid out of the present and reserved profits. Therefore, greater amount of total profit will ensure greater dividend. (ii) Stability of Earnings: A company having stable earnings is in a position to declare more dividends and vice-versa.

What are the factors affecting dividend decision Class 12?

Factors affecting dividend decision :

  • Amount of Earnings. Dividends are paid out of current and past earnings. …
  • Stability in Earnings. …
  • Stability of Dividends. …
  • Growth Opportunities. …
  • Cash Flow Position. …
  • Shareholders’Preference. …
  • Taxation Policy. …
  • Stock Market Reaction.

What is meant by dividend decision ‘? Explain any four factors which affect the dividend decision of a company?

Stability of Earnings: Companies having stable or smooth earnings prefer to give a high rate of dividend whereas companies with unstable earnings prefer to give a low rate of earnings. 3. Cash Flow Position: Paying dividends means an outflow of cash.

What is meant by dividend decisions?

The dividend decision is concerned with the quantum of profits to be distributed among shareholders. A decision has to be taken whether all the profits are to be distributed, to retain all the profits in business or to keep a part of profits in the business and distribute others among shareholders.

What do you mean by dividend decision of a company?

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.

IT IS INTERESTING:  Best answer: What is link sharing off in Google Drive?