GROUP PRESENTATION

TOPIC: FACTORS AFFECTING

DIVIDEND DECISIONS
Group 3
TERM III ROLL NO NAMES
SUB: Financial Management I
CLASS: FY BBA 2117043 Tohid Tahsildar
DIV: B 2117053 Sarvesh Parab
 DIVIDEND DECISION

■ The Dividend Decision is one of the crucial decisions made by the

finance manager relating to the pay outs to the shareholders.

■ The pay out is the proportion of Earning Per Share given to the
shareholders in form of dividends.
 TYPES OF DEVIDENDS

CASH DIVIDEND STOCK DIVIDEND

■ The cash dividend refers to the ■ The stock dividend is when a
distribution of cash to the company issues additional
shareholders a return on their stock to the shareholders
investment. instead of the cash.
 PROPERTY LIQUIDATING
DIVIDEND DIVIDEND

■ The property dividend refers to ■ The liquidating dividend is

the distribution of the property
to the shareholders a return on
their investment.
when the company is winded
up, and the company’s assets
are distributed among
shareholders by paying in the
form of a dividend.
 Factors affecting the Dividend Decisions

Amount of earnings Stable earnings Stable dividends

Growth prospects Cash flow position

 Amount of earnings
1. Amount of dividend paid by a company depends on the company’s
current and past earnings.

2. A company with high earning is in a better position to pay dividend and

vice versa.
 Stable Earnings

■ A company with stable or smooth earnings can pay higher dividends to

shareholders than a company which has unstable and uneven earnings.
 Stable Dividends

■ Every company tries to stabilise the dividend per share.

■ The dividend per share is altered only when there is a consistent increase
in earnings or full confidence in the earning potential.
 Growth Prospects

■ Companies with higher growth prospects prefer to retain a greater portion

of their earnings for future reinvestments.
■ Accordingly, they pay lesser dividends.
 Cash Flow Position

■ Payment of dividends implies a cash outflow from the company.

■ If a company has less cash (low liquidity), then it will pay less in the
form of dividends.
■ Similarly, if a company has surplus cash (high liquidity), then it will pay
out more dividends.
THANK YOU