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Anonymous users2024-02-07The impact of the dividend distribution policy on the enterprise includes: the impact on the interests of creditors and shareholders; influence on shareholder control; impact on the stability of the company; Impact on the company's debt contracts.
Dividend distribution and the company's capital structure.
The capital structure is made up of the capital required for investment, so in practice the dividend policy is affected by both the investment opportunity and its cost of capital. The residual dividend policy is to calculate the equity capital required for investment according to a certain target capital structure when the company has a good investment opportunity.
The surplus is retained and the remaining surplus is distributed as dividends. When adopting a residual dividend policy, the steps to be followed are: setting a target capital structure, i.e., determining the ratio of equity capital to debt capital, under which the weighted average cost of capital is weighted.
will reach the lowest level; Determine the shareholders' equity required for the investment under the target capital structure.
amount; maximizing the use of retained surpluses to meet the amount of equity capital required for investment scenarios; If there is a surplus after the equity capital required for the investment plan has been satisfied, it will be distributed to shareholders as dividends.
The dividend policy refers to the general meeting of shareholders of the company.
or the more principled approach adopted by the board of directors on all dividend-related matters is the policy and strategy of the company on whether to pay dividends, how many dividends to pay, and when to pay dividends, etc., mainly involving the company's strategy of distributing or retaining its earnings for reinvestment. The residual dividend policy is a dividend policy that first meets the company's capital needs. In accordance with this policy, the company determines its dividend distribution as follows:
Determine the optimal capital structure of the company; Determine the amount of funds required by the company for the next year; Determine the amount of shareholders' equity that needs to be increased to meet the funding needs in accordance with the optimal capital structure; The company's after-tax profit will first meet the company's increase needs in the next year, and the remaining part will be used to pay cash dividends for the current year.
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Anonymous users2024-02-06The influence of factors within the enterprise.
1 Monetization. A company's liquidity is an important factor influencing its dividend policy. The flexible turnover of the company's funds is a necessary condition for the normal operation and operation of the enterprise.
The distribution of cash dividends of the company should naturally be based on the premise that it does not endanger the liquidity of the company's operating funds. If the company has sufficient cash.
Assets have strong liquidity.
The ability to pay dividends is also relatively strong. If the company has consumed a large amount of cash due to expansion or debt repayment, the liquidity of assets is poor.
It would not be wise to pay large cash dividends. It can be seen that the ability of enterprises to pay cash dividends.
To a large extent, it is limited by the ability to liquidate its assets.
2 Funding capacity. If the company has strong fundraising capacity.
Consideration may be given to paying higher dividends.
Large, large, lucrative companies are more likely to pay more cash dividends because they can raise the capital they need more easily.
And enterprises that have been established for a short time, are small in scale and have high risks.
It usually takes a while to operate.
in order to obtain external funding.
As a result, the payment of dividends is often restricted.
3 Capital structure and cost of capital. There should be an optimal ratio between the company's debt and equity capital, i.e., the optimal capital structure.
In this ratio.
The company is the most valuable.
Lowest cost of capital. Due to the different dividend policies.
Retained earnings are also different.
This makes the proportion of equity capital in the company's capital structure deviate from the optimal capital structure, thus restricting the company's choice of dividend policy. Other than that.
Different dividend policies can also affect a company's future fundraising costs. Retained earnings are an important way to raise funds internally.
Compared to issuing new shares or borrowing.
The cost is lower. However, there is a contradiction between the dividend payment and the future financing cost of the enterprise, which requires the financial personnel of the enterprise to weigh the gains and losses between the dividend payment and the financing requirements, and formulate a dividend policy suitable for the actual needs of the enterprise.
4 Constraints on investment opportunities. Start from maximizing shareholder wealth.
The reason why an enterprise can keep part or all of the after-tax profits for internal accumulation is that this part belongs to the net income of shareholders.
It can enable shareholders to obtain reinvestment income that is higher than the necessary rate of return on shareholders' investment. Therefore, if the company has more profitable investment opportunities.
Low dividend policies are often adopted. Contrarily.
If it has fewer investment opportunities.
A high dividend policy can be adopted.
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Anonymous users2024-02-05The main influencing factors that should be considered in the selection of dividend policyWhen formulating the dividend policy, the company must fully consider the various influencing factors of the dividend policy, and start from the protection of the interests of shareholders, the company itself and creditors, so as to rationalize the company's income distribution. (1) Various restrictions First, laws and regulations restrict. In order to safeguard the interests of all parties concerned, the laws and regulations of various countries regulate the order of profit distribution, retained earnings, capital adequacy, debt repayment, cash accumulation, etc., and the dividend policy must comply with these legal norms.
The second is contractual restrictions. When a company borrows long-term debt, the debt contract usually has certain restrictions on the company's payment of cash dividends, and the dividend policy must meet the restrictions of such contracts. The third is the limitation of cash adequacy.
The company must have sufficient cash to pay cash dividends to meet the company's normal business activities for cash arguments. Otherwise, the amount of cash dividends will be limited.
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