Identify the type of financial decision in the following cases: i) Company wants to open a new branch at Ghaziabad. ii) A company estimating the funds required to execute the planned Expansion programme of the business. iii) Due to better growth prospects, a company decides to retain profits. (3)
Answers
Answer:
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Explanation:
This financial decision relates to the disbursement of profits back to investors who supplied capital to the firm. The term dividend refers to that part of profits of a company which is distributed by it among its shareholders.
Factors Affecting
The finance manager analyses following factors before dividing the net earnings between dividend and retained earnings:
The finance manager analyses following factors before dividing the net earnings between dividend and retained earnings:1. Earning:
The finance manager analyses following factors before dividing the net earnings between dividend and retained earnings:1. Earning:Dividends are paid out of current and previous year’s earnings. If there are more earnings then company declares high rate of dividend whereas during low earning period the rate of dividend is also low.
The finance manager analyses following factors before dividing the net earnings between dividend and retained earnings:1. Earning:Dividends are paid out of current and previous year’s earnings. If there are more earnings then company declares high rate of dividend whereas during low earning period the rate of dividend is also low.2. Stability of Earnings:
The finance manager analyses following factors before dividing the net earnings between dividend and retained earnings:1. Earning:Dividends are paid out of current and previous year’s earnings. If there are more earnings then company declares high rate of dividend whereas during low earning period the rate of dividend is also low.2. Stability of Earnings:Companies having stable or smooth earnings prefer to give high rate of dividend whereas companies with unstable earnings prefer to give low rate of earnings.
The finance manager analyses following factors before dividing the net earnings between dividend and retained earnings:1. Earning:Dividends are paid out of current and previous year’s earnings. If there are more earnings then company declares high rate of dividend whereas during low earning period the rate of dividend is also low.2. Stability of Earnings:Companies having stable or smooth earnings prefer to give high rate of dividend whereas companies with unstable earnings prefer to give low rate of earnings.3. Cash Flow Position:
The finance manager analyses following factors before dividing the net earnings between dividend and retained earnings:1. Earning:Dividends are paid out of current and previous year’s earnings. If there are more earnings then company declares high rate of dividend whereas during low earning period the rate of dividend is also low.2. Stability of Earnings:Companies having stable or smooth earnings prefer to give high rate of dividend whereas companies with unstable earnings prefer to give low rate of earnings.3. Cash Flow Position:Paying dividend means outflow of cash. Companies declare high rate of dividend only when they have surplus cash. In situation of shortage of cash companies declare no or very low dividend.