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Financial Management
Identify the financial decision which determines the amount of profit earned to be distributed and to be retained in the business. Explain any four factors affecting this decision.
It is dividend decision and the factors affecting this decision are as follows:
(i) Earning: The dividend is paid out of the present and reserved profits. Therefore, greater amount of total profit will ensure greater dividend.
(ii) Stability of Earnings: A company having stable earnings is in a position to declare more dividends and vice-versa.
(iii) Stability of Dividend: Every company adopts the policy of maintaining the stability of dividend per share. (Here the stability of dividend means that the dividend will, in no case, be allowed to fall. It is always good if the dividend remains stable or increases.) From this point of view, a little change in profit should not be allowed any increase or decrease in the dividend.
(iv) Growth Opportunities: If the company has more opportunities for growth, it will require more finance. In such a situation, a major part of the income should be retained and a small part of it should be paid as dividend.
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How the wealth of shareholders can be computed?
What is meant by Financial Management?
Every manager has to take three major decisions while performing the finance function. Explain them.
Explain any six factors affecting the financing decision of a company.
Explain any six factors affecting the dividend decision of a company.
What is meant by Dividend decision? State any four factors affecting the Dividend decision.
What is meant by Financing decision? State any four factors affecting the financing decision.
Explain briefly the factors affecting the investment decision.
Explain, in brief, any five factors that should be taken into consideration while determining the long-term dividend policy.
Or
Explain factors affecting the dividend policy of a company.
“Determining the relative proportion of various types of funds depends upon various factors”. Explain any five such factors.
Or
“Determining the overall cost of capital and the financial risk of the enterprise depends upon various factors”. Explain any five such factors.
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