• guide to residual dividend policy

    Residual Dividend Policy

    What is Residual Dividend Policy? The residual dividend policy refers to the dividend policy where a company can distribute or can not distribute its earnings as dividends. This dividend policy suggests that the corporate firm should retain earnings as long as it has investment opportunities. Under this dividend policy, the dividend distribution to the company’s shareholders is based on the future investment opportunities and a debt-equity ratio of the firm. Understanding Residual Dividend Policy Residual dividend policy suggests that a firm should retain its earnings as long as it has investment opportunities that promise a higher rate of return than the shareholder’s required rate of return. In other words, under…

  • dividend payment procedures

    What are the Procedures of Dividend Payment?

    Dividend Payment Procedures The dividend payment procedures refer to decisions and operating guidelines for executing the dividend decisions. The procedures of dividend payment of a corporate firm can be outlined as follows: Dividend Payment Procedures includes: Declaration date Date of Record Ex-dividend date Payment date # Declaration date The board of directors of the company announces that a specified amount of dividend will be paid to the stockholders. It is paid to the stockholders who are on the company’s record on the specified future date. The date on which directors meet and announce the dividend is called declaration date. Generally, the dividend is announced as a percentage on the par…

  • factors affecting dividend policy

    Factors Affecting Dividend Policy

    Factors Affecting Dividend Policy or Factors Influencing Dividend Policy of a Firm A firm’s dividend policy is affected by various factors. Some factors affect the amount of dividend and some others affect types of dividend. Factors affecting dividend policy are also called in various ways. Such as determinants of dividend policy, factors influencing dividend policy, factors of dividend policy, etc. but answers are the somehow same for those. The major factors affecting dividend policy are as follows: Legal Requirements (Legal Provisions) Firm’s Liquidity Position Repayment Need Restrictions Imposed by Bondholders and Preferred Stockholders Investment Opportunities Stability of Earnings Desire for Control Access to the Capital Markets Stockholders Individual Tax Situation…

  • types of dividend policy

    Types of Dividend Policy

    Types of dividend policy Dividend policy is a policy determined by the company to pay out its earnings as a dividend to its shareholders. There are basically four types of dividend policy, they are as follows: Stable dividend policy or Constant dividend policy Stable dividend payout policy or constant dividend payout policy Regular plus extra dividend ratio Residual dividend policy Let’s describe these types of dividend policy individually plus detail explanation, # Stable/ Constant dividend policy Under the stable dividend policy, dividend per share is fixed. Also, under this policy dividend per share should be constant. This policy may be stated as ‘Rs. 2 dividends per share’ or ‘Rs. 3…

  • what is dividend policy?

    Dividend Policy

    What is dividend policy? Dividend policy is a policy determined by the company to pay out its earnings as a dividend to its shareholders. Determining the part of earnings to be distributed as dividends is a key factor that leads the firm’s stockholders and potential investors to determine the firm’s stock value in the market place. The firm should establish and implement an effective dividend policy that leads the firm to stockholders wealth maximization. Understanding of Dividend Policy Dividend policy is concerned with determining the proportion of a firm’s earnings to be distributed in the form of cash dividend and the proportion of earnings to be retained. It is an…

  • what is dividend

    Dividend – Learning

    What is Divided? Dividend refers to the portion of net income paid out to shareholders. It is paid to shareholders in cash or stock for making investment and breaking risks. A company may pay full its earnings as dividends or half or not it depends on the company circumstances. The dividend is paid when a company is in profit or surplus. When a company paid cash out of its earnings to shareholders is known as a dividend paid and remaining is known as retained earnings. A dividend is paid at a fixed price per share as stated in the decision of the company. Advantages and Disadvantages of Dividend Paying it,…

  • Reverse Stock Split or Reverse Split
    Reverse Stock Split

    Reverse Stock Split

    What is a Reverse Stock Split? A reverse stock split is an action taken by the firm to reduce the outstanding shares by increasing the price per share. It is also known as a stock merge or reverse split. This split merged the larger number of shares to smaller and shares price increased from small amounts to large. Similarly, it does not affect the total value of the firm. Some examples are 2-for-3, 3-for-5 reverse stock split. The opposite of it a stock split, a stock split is an action taken or technique used by a firm (company, corporate) to increase the number of shares outstanding by reducing the par…

  • Stock Split
    Stock Split

    Stock Split – Understanding

    What is a Stock Split? A stock split is an action taken or technique used by a firm (company, corporate) to increase the number of shares outstanding by reducing the par value and market price of the stock. Even, the number of outstanding shares increases the cash value of the company does not increase, rather than remains the same as pre-split amounts because it does not affect the balance sheet amount of the company. The purpose of it is to enhance the marketability of shares bringing it within optimal price range. When a company announces stock splits, it results in an increase in the number of outstanding shares with a…

  • preferred-stock-definition-types
    Shareholder's Equity

    Preferred Stock definition and its Types

    Preferred Shares The shares on which rights are provided to the shareholders to claim on dividend and liquidated value of the company prior to the common shareholders called preferred stock. Types of preferred stocks Perpetual vs Redeemable shares Convertible vs Non-Convertible shares Cumulative vs Non-Cumulative shares Participative vs Non-Participative shares 1. Perpetual vs Redeemable preferred shares Perpetual preferred stock The preferred shares have a fixed maturity period called a perpetual preferred share. In this share when the maturity period ends the company returned the amounts of investors which was paid at the beginning of the period. Redeemable shares The shares which have no maturity period as well as which have…