PPT - Dividend Decision | Accountancy and Financial Management - B Com PDF Download

 Page 1


Dividend Decisions
Dividend Decisions
Meaning 
Meaning 
Types of Dividend policies 
Types of Dividend policies 
Factors influencing dividend policy 
Factors influencing dividend policy 
Forms of dividend
Forms of dividend
Page 2


Dividend Decisions
Dividend Decisions
Meaning 
Meaning 
Types of Dividend policies 
Types of Dividend policies 
Factors influencing dividend policy 
Factors influencing dividend policy 
Forms of dividend
Forms of dividend
Meaning
Meaning
The term dividend refers to that part 
The term dividend refers to that part 
of profits of a company which is 
of profits of a company which is 
distributed by the company among 
distributed by the company among 
its shareholders. 
its shareholders. 
It is the reward of the shareholders for 
It is the reward of the shareholders for 
investments made by them in the 
investments made by them in the 
shares of the company. 
shares of the company. 
Page 3


Dividend Decisions
Dividend Decisions
Meaning 
Meaning 
Types of Dividend policies 
Types of Dividend policies 
Factors influencing dividend policy 
Factors influencing dividend policy 
Forms of dividend
Forms of dividend
Meaning
Meaning
The term dividend refers to that part 
The term dividend refers to that part 
of profits of a company which is 
of profits of a company which is 
distributed by the company among 
distributed by the company among 
its shareholders. 
its shareholders. 
It is the reward of the shareholders for 
It is the reward of the shareholders for 
investments made by them in the 
investments made by them in the 
shares of the company. 
shares of the company. 
Dividend policy and significance of 
Dividend policy and significance of 
dividend policy
dividend policy
It refers to the policy that the 
It refers to the policy that the 
management formulates in regard to 
management formulates in regard to 
earnings for distribution as dividends
earnings for distribution as dividends
 
 
among shareholders. it determines 
among shareholders. it determines 
the division of earnings between 
the division of earnings between 
payments to shareholders and 
payments to shareholders and 
retained earnings. 
retained earnings. 
Page 4


Dividend Decisions
Dividend Decisions
Meaning 
Meaning 
Types of Dividend policies 
Types of Dividend policies 
Factors influencing dividend policy 
Factors influencing dividend policy 
Forms of dividend
Forms of dividend
Meaning
Meaning
The term dividend refers to that part 
The term dividend refers to that part 
of profits of a company which is 
of profits of a company which is 
distributed by the company among 
distributed by the company among 
its shareholders. 
its shareholders. 
It is the reward of the shareholders for 
It is the reward of the shareholders for 
investments made by them in the 
investments made by them in the 
shares of the company. 
shares of the company. 
Dividend policy and significance of 
Dividend policy and significance of 
dividend policy
dividend policy
It refers to the policy that the 
It refers to the policy that the 
management formulates in regard to 
management formulates in regard to 
earnings for distribution as dividends
earnings for distribution as dividends
 
 
among shareholders. it determines 
among shareholders. it determines 
the division of earnings between 
the division of earnings between 
payments to shareholders and 
payments to shareholders and 
retained earnings. 
retained earnings. 
Significance of dividend policy
Significance of dividend policy
?
The firm has to balance between the 
The firm has to balance between the 
growth of the company and the 
growth of the company and the 
distribution to the shareholders 
distribution to the shareholders 
?
It has a critical influence on the 
It has a critical influence on the 
value of the firm
value of the firm
?
It has to also to strike a balance 
It has to also to strike a balance 
between the long term financing 
between the long term financing 
decision( company distributing 
decision( company distributing 
dividend in the absence of any 
dividend in the absence of any 
investment opportunity) and the 
investment opportunity) and the 
wealth maximisation  
wealth maximisation  
Page 5


Dividend Decisions
Dividend Decisions
Meaning 
Meaning 
Types of Dividend policies 
Types of Dividend policies 
Factors influencing dividend policy 
Factors influencing dividend policy 
Forms of dividend
Forms of dividend
Meaning
Meaning
The term dividend refers to that part 
The term dividend refers to that part 
of profits of a company which is 
of profits of a company which is 
distributed by the company among 
distributed by the company among 
its shareholders. 
its shareholders. 
It is the reward of the shareholders for 
It is the reward of the shareholders for 
investments made by them in the 
investments made by them in the 
shares of the company. 
shares of the company. 
Dividend policy and significance of 
Dividend policy and significance of 
dividend policy
dividend policy
It refers to the policy that the 
It refers to the policy that the 
management formulates in regard to 
management formulates in regard to 
earnings for distribution as dividends
earnings for distribution as dividends
 
 
among shareholders. it determines 
among shareholders. it determines 
the division of earnings between 
the division of earnings between 
payments to shareholders and 
payments to shareholders and 
retained earnings. 
retained earnings. 
Significance of dividend policy
Significance of dividend policy
?
The firm has to balance between the 
The firm has to balance between the 
growth of the company and the 
growth of the company and the 
distribution to the shareholders 
distribution to the shareholders 
?
It has a critical influence on the 
It has a critical influence on the 
value of the firm
value of the firm
?
It has to also to strike a balance 
It has to also to strike a balance 
between the long term financing 
between the long term financing 
decision( company distributing 
decision( company distributing 
dividend in the absence of any 
dividend in the absence of any 
investment opportunity) and the 
investment opportunity) and the 
wealth maximisation  
wealth maximisation  
Contd.....
Contd.....
?
The market price gets affected if 
The market price gets affected if 
dividends paid are less.
dividends paid are less.
?
Retained earnings helps the firm to 
Retained earnings helps the firm to 
concentrate on the growth, 
concentrate on the growth, 
expansion and modernisation of the 
expansion and modernisation of the 
firm
firm
?
To sum up, it to a large extent 
To sum up, it to a large extent 
affects the financial structure, flow 
affects the financial structure, flow 
of funds, corporate liquidity, stock 
of funds, corporate liquidity, stock 
prices, growth of the company and 
prices, growth of the company and 
investor’s satisfaction.
investor’s satisfaction.