FINANCE

Finance

Finance

Answer 1

What practical considerations may influence the dividend policy of a company

A company can not be cured of their common principle irrelevant bonus. Should consciously evaluate their components and mitigating natural environment that works # in while hitting out its bonus policy. Most companies appear to agree to an agreement of great importance to the decisions of his cousin. The premium bonus and the first principle are held in great length. Sometimes there are companies that make a short bar policy premiums (2,009 Bromwich 8). The discomfort share holders of a general agreement on the principle of subsidy, economic thinking economists suggest the principle of bonus where appropriate, business administration and heal the bonds as a principle to hand later.

Recognizing the importance of the principle of subsidy that we are considering the components and concerns apply to the formulation of policy premiums.

Dividend Policy: Pay out ratio

Two important ratios beginning the company € ™ s bond is the income ratio means and how it should be constant for the bonus period. These two ratios are conceptually distinct from one another. The average payout percentage may be high or low in spite of the premium if the flow is stable or fluctuating.

Funds Requirement

A key component to take the burden of production a company is its requirement for capital in the foreseeable future. This can be considered with the help of the economic outlook provided in the context of the variety of long term planning. In general, companies have considerable buying what the financing possibilities and wishes of important therefore tend to keep their share of payment and not reduced to the preservation of assets for growth. Reliance Industries Limited for the show maintained its performance at a smaller percentage, having increased rapidly (Otley 2000, 28). Moreover Which companies are restricted from buying more general means to pursue a more generous return policy out.

Liquidity

Dividends subject to payment of money. The liquidity of the company has held an effect on the decision of bonus. A company may be able to travel more than a small portion of their profits regardless of their desire to manage because of sufficient liquidity. This is normally the case of high to make money quickly, but increasingly companies. This is because investment and other firm pledges for the expansion not to manage their liquidity are abundant.

Access to external sources of funding

In general a company is how easy access to external finance causes may seem less secure in their decision to bonus. For example, a company of its conclusion is somewhat misaligned bond purchase in his conclusion, and its liquidity position. Enjoy a bigger stage simple accessibility of external financing flexibility as an enterprise tends to be more generous in its policy performance bonuses. On the other hand has a firm in adversity mobilization of foreign investment is likely to force thin on internal development funds (Mohanty 1993 57). Given the buying and other firm promises and a lower latitude stage financing, as a company is likely to pursue ...