Q. Explain a variety of factors determining Dividend Policy?
Dividend: - Dividend demotes to that part of net profits of a company which is distributed between shareholders as a return on their investment in the company. Dividend is paid on preference and equity shares of the company. On preference shares dividend is rewarded at a predetermined fixed rate.
However decision of dividend on equity shares and dividend is taken for each year separately. A established approach for the payment of dividend is known as dividend policy. Therefore the dividend policy divides the net profits or earnings after taxes into two parts:
(1) Earnings to be dispersed as dividend
(2) Earnings reserved in the business.