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प्रश्न
Explain the following as factor affecting dividend decision:
Stability of earnings
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उत्तर
Stable Earnings: A company with stable and smooth earnings can pay higher dividends to shareholders than a company which has unstable and uneven earnings.
संबंधित प्रश्न
'Abhishek Ltd'. is manufacturing cotton clothes. It has been consistently earning good profits for many years. This year too, it has been able to generate enough profits. There is the availability of enough cash in the company and good prospects for growth in future. It is a well-managed organisation and believes in quality, equal employment opportunities and good remuneration practices. It has many shareholders who prefer to receive a regular income from their investments. It has taken a loan of Rs 50 lakhs from I.C.I.C.I. Bank and is bound by certain restrictions on the payment of dividend according to the terms of the loan agreement.
The above discussion about the company leads to various factors which decide how much
of the profits should be retained and how much has to be distributed by the company.
Quoting the lines from the above discussion, identify and explain any four such factors.
Explain the following as factor affecting dividend decision:
Stability of dividends
Explain the following as factor affecting dividend decision:
Access to capital market
Explain the following as factor affecting dividend decision:
Legal constraints
Explain the following as factor affecting 'financing decision'.
Cash flow position of the business
Explain the following as factor affecting 'financing decision'.
Level of fixed operating cost
Give the meaning of ‘Investment’ and ‘Dividend’ decisions of financial management.
Explain the factors affecting the dividend decision.
| Ravi has joined as a finance manager at MTA Ltd. He had to arrange funds of rupees one crore for the company. The Chief Executive Officer of the company wants to arrange the funds by a public issue whereas the finance manager wants to have a mix of debt and equity as this will determine the overall cost of capital and the financial risk of the enterprise. |
- Identify and give the meaning of the financial decision suggested by the finance manager in the above case.
- State any three factors affecting the decision identified in (i) above.
Identify the financial decision that is concerned with deciding how much of the profit earned by a company is to be distributed to shareholders and how much should be retained in the business. Also state any three factors affecting the identified decision.
Besides the total amount of long-term finance required, what must a business identify?
What must a business decide about each available source of finance?
What combination must a firm select when choosing between debt and equity?
What is the nature of debt in a debt-and-equity comparison?
Which statement describes the general cost of debt compared with equity?
What generally happens as the proportion of debt in total capital increases?
How is interest treated while determining taxable profit?
Which financing source is favoured by a desire to retain control?
Which sequence correctly orders the seven factors affecting financing decisions?
