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Question 19Q

Expert-verified
Intermediate Accounting (Kieso)
Found in: Page 810

Short Answer

What factors influence the dividend policy of a company?

Dividend policies are affected by the profitability and availability of cash in the business.

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Step by Step Solution

Meaning of Dividend Policy

Dividend policies outline how a company's dividend payments to shareholders will be structured. It helps a company decide how much and when dividends should be declared and paid.

Factors Influences Dividend Policy

The following factors influence the dividend policy of a company:

  1. The consistency of earnings.
  2. Current earnings.
  3. Earnings potential.
  4. Working capital or retained earnings contractual limits exist or do not exist.
  5. A balance of retained earnings.

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