You asked: 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 factors affecting the dividend policy?

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.

Which of the following factors affect the dividend decision?

Factors affecting dividend decision are: i Stability of earnings. A company having a stable growth in the earning pay regular dividend than a company with unstable earnings. ii Growth opportunities. … Availability of liquid cash should be ensured before declaring dividend.

What is dividend decision explain any 5 factors which affect dividend decision?

(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.

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What are dividend decisions mention any four factors that affect dividend?

(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.

Which of the following external factors affect the dividend policy?

1) Dividend payout rate- defined as the ratio of dividends per share and earnings per share. 3) Unregulated firms in this result are compared with earlier studies. … 5) Amount of profit to be retained in the firm.

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

1. Amount of Earning :- A firm pays dividends out of its current and the past earnings. This implies that earnings play a key role in the dividend decision. A company having higher earnings will be in a position to pay a higher amount of dividend to its shareholders.

What are the factors affecting the dividend decision of a company explain any four factors?

(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 is dividend policy?

A dividend policy is the policy a company uses to structure its dividend payout to shareholders. Some researchers suggest the dividend policy is irrelevant, in theory, because investors can sell a portion of their shares or portfolio if they need funds.

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