PPT: Dividend Decision | Financial Management & Strategic Management for CA Intermediate PDF Download

 Page 1


Dividend Decision
Meaning ,Definition, Types of Dividend , Factors Determine Dividend 
Policy and Dividend Theories
Page 2


Dividend Decision
Meaning ,Definition, Types of Dividend , Factors Determine Dividend 
Policy and Dividend Theories
DIVIDEND DECISION
? The term dividend refers to that part of profits of a 
company which is distributed by the company among its 
shareholders.
? It is the reward of the shareholders for investments 
made by them in the shares of the company.
? According to the Institute of Chartered Accountant of 
India, dividend is defined as “a distribution to 
shareholders out of profits or reserves available for 
this purpose”.
Page 3


Dividend Decision
Meaning ,Definition, Types of Dividend , Factors Determine Dividend 
Policy and Dividend Theories
DIVIDEND DECISION
? The term dividend refers to that part of profits of a 
company which is distributed by the company among its 
shareholders.
? It is the reward of the shareholders for investments 
made by them in the shares of the company.
? According to the Institute of Chartered Accountant of 
India, dividend is defined as “a distribution to 
shareholders out of profits or reserves available for 
this purpose”.
TYPES OF DIVIDEND/FORM OF DIVIDEND
Page 4


Dividend Decision
Meaning ,Definition, Types of Dividend , Factors Determine Dividend 
Policy and Dividend Theories
DIVIDEND DECISION
? The term dividend refers to that part of profits of a 
company which is distributed by the company among its 
shareholders.
? It is the reward of the shareholders for investments 
made by them in the shares of the company.
? According to the Institute of Chartered Accountant of 
India, dividend is defined as “a distribution to 
shareholders out of profits or reserves available for 
this purpose”.
TYPES OF DIVIDEND/FORM OF DIVIDEND
.,
? Cash Dividend
If the dividend is paid in the form of cash to the shareholders, it is 
called cash dividend. It is paid periodically out the business concerns 
EAIT (Earnings after interest and tax). 
Cash dividends are common and popular types followed by majority 
of the business concerns.
? Scrip dividend. 
A scrip dividend promises to pay shareholders at future specific date. 
In case a company does not have sufficient funds to pay dividends in 
cash, it may issue notes or bonds for amounts due to shareholders.
The objective of scrip dividend is to postpone the immediate 
payment of cash. A scrip dividend bears interest and is accepted as a 
collateral security.
? Bond Dividend
Bond dividend is also known as script dividend. If the company does 
not have sufficient funds to pay cash dividend, the company 
promises to pay the shareholder at a future specific date with the 
help of issue of bond or notes.
Page 5


Dividend Decision
Meaning ,Definition, Types of Dividend , Factors Determine Dividend 
Policy and Dividend Theories
DIVIDEND DECISION
? The term dividend refers to that part of profits of a 
company which is distributed by the company among its 
shareholders.
? It is the reward of the shareholders for investments 
made by them in the shares of the company.
? According to the Institute of Chartered Accountant of 
India, dividend is defined as “a distribution to 
shareholders out of profits or reserves available for 
this purpose”.
TYPES OF DIVIDEND/FORM OF DIVIDEND
.,
? Cash Dividend
If the dividend is paid in the form of cash to the shareholders, it is 
called cash dividend. It is paid periodically out the business concerns 
EAIT (Earnings after interest and tax). 
Cash dividends are common and popular types followed by majority 
of the business concerns.
? Scrip dividend. 
A scrip dividend promises to pay shareholders at future specific date. 
In case a company does not have sufficient funds to pay dividends in 
cash, it may issue notes or bonds for amounts due to shareholders.
The objective of scrip dividend is to postpone the immediate 
payment of cash. A scrip dividend bears interest and is accepted as a 
collateral security.
? Bond Dividend
Bond dividend is also known as script dividend. If the company does 
not have sufficient funds to pay cash dividend, the company 
promises to pay the shareholder at a future specific date with the 
help of issue of bond or notes.
.
? Stock Dividend
Stock dividend is paid in the form of the company stock due to 
raising of more finance.
Under this type, cash is retained by the business concern. Stock 
dividend may be bonus issue. This issue is given only to the existing 
shareholders of the business concern.
? Property Dividend
Property dividends are paid in the form of some assets other than 
cash. It will distributed under the exceptional circumstance. This type 
of dividend is not published in India.
? Liquidating dividend. 
When the board of directors wishes to return the capital originally 
contributed by shareholders as a dividend, it is called a liquidating 
dividend, and may be a precursor to shutting down the business.