Describe the influence of the company s own factors on the formulation of dividend policy 5

The influence of the company's own factors refers to the impact of various factors within the company and the various environments and opportunities it faces. It mainly includes cash flow, borrowing capacity, investment opportunities, cost of capital, etc.

1) Cash flow. Enterprises must have sufficient cash in their business activities, otherwise payment difficulties will occur. When distributing cash dividends, companies must take into account cash flow as well as the liquidity of assets, and excessive distribution of cash dividends will reduce the company's cash holdings, affect the ability to pay in the future, and may even cause financial difficulties.

2) Ability to borrow. Borrowing capacity is an important aspect of an enterprise's ability to raise funds, and different enterprises will have certain differences in their ability to borrow in the capital market. When distributing cash dividends, the company should take into account its own borrowing ability, if the borrowing ability is strong, when the enterprise lacks funds, it can easily raise funds in the capital market, then it can adopt a more relaxed incentive policy; If the borrowing capacity is poor, a tighter incentive policy should be adopted, with less cash dividends and more provident fund.

3) Investment opportunities. The investment opportunities of enterprises are also a very important factor influencing the incentive policy. When the enterprise has good investment opportunities, the enterprise should consider paying less cash dividends and increasing retained profits for reinvestment, which can accelerate development and increase the future income of the enterprise, and this dividend policy is often easy for shareholders to accept.

When companies do not have good investment opportunities, they tend to pay more cash dividends.

4) Cost of capital. The cost of capital is the basic basis for enterprises to choose financing methods. Retained profits are an important way for enterprises to raise funds internally, and it has the advantages of low cost and good concealment compared with issuing new shares or borrowing debts.

A reasonable dividend policy is actually to solve the problem of the proportional relationship between distribution and retention and how to make reasonable and effective use of retained profits. If an enterprise pays a large amount of cash dividends on the one hand, and on the other hand, it has to raise higher-cost funds through the capital market, which is undoubtedly contrary to the basic principles of financial management. Therefore, when formulating the dividend policy, the company's demand for capital and the cost of capital should be fully considered.

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's cash is sufficient and its assets are more liquid, 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, and the liquidity of its assets is poor, it is not wise to pay a large amount of cash dividends.

It can be seen that the ability to pay cash dividends of enterprises is limited by their ability to realize assets to a large extent.

2 Funding capacity. If the company has a strong ability to raise funds, it can consider paying higher dividends and refinancing to meet the needs of monetary funds for business operations; Conversely, consider reserving more funds for internal turnover or to repay debts that are about to mature. Generally speaking, large, profitable companies are more likely to pay more cash dividends because they can raise the capital they need more easily. However, enterprises that have been established for a short period of time, are small in scale and have high risks usually need to operate for a period of time before they can obtain funds from outside, so they often have to limit the payment of dividends.

3 Capital structure and cost of capital. There should be an optimal ratio between the company's debt and equity capital, that is, the optimal capital structure, in which the company's value is the largest and the cost of capital is the lowest. Due to the different dividend policies, the retained earnings are also different, which 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.

In addition, different dividend policies can also affect the company's future financing costs.

4 Constraints on investment opportunities. From the perspective of 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, which can enable shareholders to obtain reinvestment income higher than the necessary rate of return on shareholders' investment. Therefore, if the company has more profitable investment opportunities, it often adopts a low dividend policy.

Conversely, if it has fewer investment opportunities, it can adopt a high dividend policy.

1) Legal factors. The main legal factors affecting the company's dividend policy are: the constraints of capital preservation, the constraints of enterprise accumulation, the constraints of corporate profits, and the constraints of solvency.

2) Debt contract factor. A debt contract refers to a contract in which a creditor restricts the distribution of cash dividends in the form of a contract in order to prevent the enterprise from issuing too many dividends, affecting its solvency and increasing the risk of adding services.

3) The company's own reasons. The influence of the company's own factors refers to the impact of various factors within the joint-stock company and the various environments and opportunities it faces on its dividend policy. It mainly includes cash flow, borrowing capacity, investment opportunities, cost of capital, etc.

4) Shareholder factors. The main factors affecting the dividend policy are: the pursuit of stable income and risk aversion; concerns about dilution of control; Avoid income tax.

Companies must consider relevant factors when formulating dividend policies. The main factors influencing the dividend policy are:

1) Legal factors. In places where joint-stock companies are more developed, many countries have a large number of regulations on the payment of dividends.

2) Contractual constraints. In corporate bonds and loan contracts, there is usually a clause restricting the company from paying dividends, which usually stipulates that the payment of dividends cannot exceed a certain percentage of the accumulated surplus, the purpose of which is to ensure that the company is solvent.

3) Liquidity of funds. The liquidity of the company's funds is an important factor affecting the dividend policy. The company has sufficient cash, strong liquidity, and strong ability to pay dividends.

The expanding company should ensure that it has a certain degree of liquidity to cope with the occurrence of unexpected situations, and should not pay large dividends that endanger the company's solvency.

4) Funding capacity. If the company has a strong ability to raise funds and can raise the required funds at any time, then it also has a strong ability to pay dividends.

5) Investment opportunities. Dividend policy is largely influenced by investment opportunities.

6) Shareholder opinions. The opinions of shareholders may be as follows:1

Restriction of dividend payments in order to secure a controlling stake. 2.Restricting dividend payments to avoid taxes.

3.Dividends are claimed for regular income. 4.

Asking for dividends to avoid risk.

7) The company's existing operations. The company's operating conditions and operating environment will affect its dividend policy. Expanding companies generally have a low dividend policy.

Companies with strong profitability can adopt a relatively high dividend policy. Otherwise, a lower dividend policy is adopted. Companies with cyclical changes in their operations are better off adopting a fixed dividend plus extra dividend policy, a lower fixed dividend during the depression phase of the business cycle, and a fixed dividend plus extra dividend policy at the peak of the business cycle.

1. Cash flow, enterprises must have sufficient cash in business activities, otherwise payment difficulties will occur.

2. Borrowing ability, borrowing ability is an important aspect of the financing ability of enterprises, and the borrowing ability of different enterprises in the capital market will have certain differences.

3) Investment opportunities. Investment opportunities for companies are also a very important factor influencing dividend policy. When the enterprise has good investment opportunities, the enterprise should consider paying less cash dividends and increasing retained interests for reinvestment, which can accelerate the development of the enterprise and increase the future income of the enterprise, and this dividend policy is often easy to accept by shareholders.

4) Cost of capital. The cost of capital is the basic basis for enterprises to choose financing methods. Retained interest is an important way to raise funds within an enterprise, and it has the advantages of low cost and good concealment compared with the issuance of new shares or debt.

A reasonable dividend policy is actually to solve the problem of the proportional relationship between distribution and retention and how to make reasonable and effective use of retained profits.

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Factors influencing dividend policy:

1. Various constraints:

1. Contract constraints: When the doll is borrowed from long-term debt, the debt contract pays cash dividends to the company.

There are usually certain restrictions, and the company's dividend policy must meet the constraints of such contracts.

2. Legal constraints: In order to safeguard the interests of all parties concerned, the laws of various countries regulate the distribution of profits of the company.

The order, capital adequacy and other aspects are regulated, and the company's dividend policy must comply with these legal norms.

3. Cash adequacy constraints: The company must have sufficient cash to pay cash dividends. If the company does not have sufficient cash, the amount of cash dividends it can pay is necessarily limited.

2. Investment Opportunities:

1. If the company has many investment opportunities and a large demand for funds, the company is likely to consider finding less gold dividends and using more profits for investment and development.

2. The shares should maintain a relatively reasonable capital structure.

and capital costs. When determining the dividend policy, the company should comprehensively consider the quantity and cost of each financing channel, so that the dividend policy is consistent with the company's ideal capital structure and capital cost.

3. Solvency:

Solvency is a fundamental factor to be considered when determining a dividend policy for a joint-stock company. Dividend distribution is a cash expenditure, and a large amount of cash expenditure will inevitably affect the company's solvency. Therefore, when determining the amount of dividends, the company must consider the impact of cash dividend distribution on the company's solvency, so as to ensure that the company can still maintain a strong solvency after the distribution of cash dividends, so as to maintain the company's reputation and borrowing ability.

Fourth, information transmission:

Dividend distribution is an important piece of information that a joint-stock company conveys to the outside world about the company's financial situation and future prospects. When determining a dividend policy, a company must consider the possible reaction to the policy.

5. Benefit Impact:

If the company's shareholders and management value the control of the original shareholders over the company, the company may be less inclined to issue new shares and will make more use of the company's internal accumulation. Such a company will have a lower cash dividend distribution.

Dividend policy refers to the general meeting of shareholders or the board of directors of the company, on all matters related to dividends, the more principled approach is about whether the company pays dividends, how many dividends to pay and when to pay dividends and other aspects of the policy and strategy, mainly involving the company's distribution of its earnings to the base is retained for reinvestment. It is divided into narrow and broad senses. In a narrow sense, the dividend policy refers to the proportional relationship between the retention of earnings and the payment of dividends on common shares, that is, the determination of the dividend payment ratio.

The dividend policy in a broad sense includes: the determination of the dividend announcement date, the determination of the dividend payment ratio, and the fund raising at the time of dividend distribution. Legal factors influencing dividend policy include:

Capital preservation constraints, capital accumulation constraints, solvency constraints, and excess accumulation profit constraints. According to Article 167 of the Company Law, when a company distributes the after-tax profits of the current year, it shall withdraw 10% of the profits and include them in the company's statutory reserve fund. If the cumulative amount of the company's statutory reserve fund is more than 50% of the company's registered capital, it can no longer be withdrawn.

If the company's statutory reserve fund is insufficient to make up for the losses of previous years, it shall first use the profits of the current year to make up for the losses before withdrawing the statutory reserve funds in accordance with the provisions of the preceding paragraph. After the company withdraws the statutory reserve fund from the after-tax profits, it can also withdraw any reserve fund from the after-tax profits by resolution of the shareholders' meeting or the general meeting of shareholders. The after-tax profits remaining after the company makes up for the losses and withdraws the provident fund shall be distributed by the limited liability company in accordance with the provisions of Article 34 of this Law; Shares are distributed in proportion to the shares held by shareholders, except for those that are not distributed in proportion to the shares held by the articles of association.

If the shareholders' meeting, the general meeting of shareholders or the board of directors violates the provisions of the preceding paragraph by distributing the immense profits to the shareholders before the company makes up the losses and withdraws the statutory reserve fund, the shareholders shall return the profits distributed in violation of the provisions to the company. Shares of the Company held by the Company shall not be subject to distribution of profits.

The factors that affect the dividend policy include legal factors, internal company factors, shareholder factors, and other factors.

1) Legal factors: the principle of capital preservation; the constraints of the enterprise's accumulation; the principle of maintaining solvency; Tax constraints.

2) Internal factors of the company: liquidity; Da Nai's ability to raise funds; capital structure and cost of capital; investment opportunities; Profitability.

3) Shareholder factors: the requirement of equity control; The requirement of low tax burden and stable income.

4) Other factors: inflation factors; the inertia of the dividend policy; Contractual factors.

Various restrictions:

1. Legal restrictions: In order to safeguard the interests of all parties concerned, the laws and regulations of various countries regulate the company's profit distribution order, retained earnings, capital adequacy, debt repayment, cash accumulation, etc., and the dividend policy must comply with these legal norms.

2. Inflation: When inflation occurs, the funds of depreciation reserves often cannot meet the needs of replacing assets, and the company needs to make up from retained profits in order to maintain its original production capacity, which may lead to a decline in the level of dividend payment.

3. Contractual restrictions: When a company borrows long-term debtors to imitate town affairs, the debt contract usually has certain restrictions on the company's cash dividends, and the dividend policy must meet the restrictions of such contracts.

4. Cash adequacy restriction: The company must have enough cash to pay cash dividends, which can meet the cash demand of the company's normal business activities.