RENITA IS A LECTURER IN ONE OF THE TOP MOST UNIVERSITIES IN INDIA.SHE IS A POST GRADUATE IN BUSINESS ADMINISTRATION AND FINANCIAL MANAGEMENT,SHE TEACHES ECONOMIC ANALYSIS,ORGANISATIONAL BEHAVIOUR,MERCANTILE LAW,LABOUR LAWS AND HUMAN RESOURCE MANAGEMENT.
The factors that deserve considerations are:
- Fund needs of the firm
- Liquidity
- Assessment of any valuation information
- Control
- restrictions in bond indenture or loan agreement and
- Ability to borrow
In dividend pay out,first consideration to the mangement is the funds need of the firm.Cash budgets and projected source and use of funds statements are of particular use.The cash budgets should be prepared taking into account the expected operating cash flows of the firm,expected future capital expenditures and any other thing that affects the cash position or in other words the financial affairs of the firm.A famous quote from J.C.Van Horne where he says that "The key is to determine the likely cash flows and cash position of the company in the absence of a change in dividend."
The firm will determine if anything is left over after servicing its fund needs including profitable investment projects.The farsightedness on the part of the management is of great necessity taking into account the firms situation over a resonable number of years to iron out fluctuations.The management should therefore analyse the likely ability of the firm to sustain the dividend relative to the probability distributions of future cash inflows,outflows and cash positions.Since dividends reflect and represent a cash outflow,dividend decisions need major considerations.a
A growing company cannot be so liquid as it needs funds for fixed assets and permanent working capital requirements.However some liquidity cushions are always a sound financial policy and the maangement of the company must want it for the sake of flexibility of the company and for protection against risks and uncertainity.THe liquidity of the company involves investment and tak9ing financial decisions at the right time.THe rate of asset expansion and the need for funds are determined by correct investment decisions.So specific generalisations as to the effect of dividends on valuation cannot be easily made.Generally companies having the same growth rate follow the same dividend pay out ratio.The management should therefore judge the informational effect of a dividend-the expectations of the investors.
Dividend pay out has a direct effect on the controlling interest of the company.The management should therefore give a serious though on this aspect of financial management.In case a company raises its dividend pay-out,it may need to raise capital at a later time through the sale of shares and this may lead to dilution of the controlling interest.In such a circumstance,the existing stock holder may prefer a lesser amount of dividend and financing of investment needs with retained earnings.THerefore taking correct decisions on a dividend pay out will prove beneficial only if prudent and efficient financial decisions and managerial considerations on dividend payout is made.
- Ask / Related Q&A
Congress Irrationality and Arm forces Loss in Afghanistan
By: hasan yahya | 08/11/2009The article argue that American interest should not be considered a joke, when it comes to dicisions concern our soldiers abroad. The author crticizes the Congress of its irrational decisions lately, after the number of soldiers killed in Afghanistan reaced 1400, and calls for the withdrawal of American forces and urges Barack Obama to follow his slogan for change to the better, by divorcing himself fom the previous administration mistakes.
Nidal Malik Hassan:Texas, Fort Hood Shooter’s Islam and Motives
By: hasan yahya | 08/11/2009The author analyzes the motives of Texas shooter, Nidal Malik Hasan from assimilation theories point of view. He argues that the rule of inclusion devout religious persons to army forces should be restricted Prophet of Islam did it, where Thimmis excluded from arm forces recruit. Israel follows understood the in recruiting its army. USA have to understood the logic behind Muhammad’s and Israel’s motives not to recruit out of their faith. I think FBI and CIA still need more knowledge.
Islamic Rules and suspected Fort Hood Shooter’s Motives
By: hasan yahya | 07/11/2009In this article professor Yahya analyzes the motives of Texas shooter, Nidal Malik Hasan from sociological point of view and assimilation theories. He argues that the rule of inclusion devout religious persons to army forces should be restricted according to Islamic tradition. Prophet of Islam did it, where Thimmis were excluded from arm forces recruit. Israel follows it in recruiting its army. USA have to understood the logic behind Muhammad’s and Israel’s motives not to recruit out of their faith.
Want To Sell Your Structured Settlement? Here's 4 Things You Must Consider
By: Paige Chen | 07/11/2009Wait - You may want to consider several factors before you make that final decision to sell structured settlements.You may save yourself a lot of headache if you consider some of the "Pros and Cons" of making such a decision.. The most important advantages of structured settlements include regular payments that are free from income tax and are secured by state and federal laws. This is not necessarily true for other financial assets or instruments. Structured settlements are also a...
The common reasons for business failure
By: Steve Thatcher | 06/11/2009The key to avoid business failure, is not to begin one. 60% of businesses that start, also fail within three years. To give your small business the best chance of success, take note of these small tips.
How much control should a condo association have?
By: Emerson Poort | 04/11/2009Be careful what you wish for. That’s the hard lesson learned by one Pittsburgh-area condo association board. The board fought for, and won, independence from the local township when it came to roadwork and maintenance, and may be regretting their decision.
Thump Down to USA Congress: Goldstone Report Again
By: hasan yahya | 04/11/2009This is the second article for the author concerning UN Goldstone Report. In this article, the author argue that starategic planning for the United States foreign policy implies being neutral in the Middle East conflict. The American Congress, is an obstacle to that goal, by passing the 867 resolution.
World Hunger and Composition of Mother's Milk
By: hasan yahya | 04/11/2009Hunger,famine and malnutrition are most influencing poor people in poor unexploited lands and minds. This article explains the problem by making a comparative analysis of mother milk ingredients in LDCs and MDCs. Some factors are introduced as solutions to curb the worldwide problem of hunger.
Managerial Considerations in Dividend Pay-Out
By: RENITA DUBEY | 02/07/2009 | Strategic PlanningA host of factors have to be considered by the management before deciding upon the final dividend pay-out.Nevertheless,these considerations must have a lot of relevance to the theory of dividend pay-out and the valuation of the firm.Here are the needs for security analysis and security reports.The management is to consider what information the company is conveying with its present dividend and what it would convey with a possible change in dividend.
Financial Analysis-the Accountants Tool
By: RENITA DUBEY | 25/06/2008 | ManagementIn today’s complex financial world, a continuous study of financial management is imperative and ensures sound Financial Management, the need for financial analysis cannot be over-emphasised.There are different methods of financial analysis that are usually adopted enable the financial manager to assess the financial position
Amity Institute of Competitive Intelligence&corporate Warfare
By: RENITA DUBEY | 18/06/2008 | College & UniversityAmity institute of Competitive Intelligence and corporate warfare,An institution of excellence offers a full time M.B.A program with a dual specialization in Sales&Marketing.This course is becoming very popular among students.The Institution aims at imparting best of knowledge and facilitates research in Competitive Intelligence &Corporate Warfare blended with management,business Strategy and environmental sensitivity thereby enabling students to develop competitive mechanisms for organisations.
Working Capital Management-an Effective Tool for Organisational Success
By: RENITA DUBEY | 18/06/2008 | ManagementWorking capital by the term itself is referred to as the capital employed in the day to day working of the business operations.Therefore proper adminstration of current assets and current liabilities is known as working capital.It is very essential to maintain a running cash reserve to keep the organisation in a working state thereby maintaining its positive hold on the liquidity.All managerial or otherwise financial decisions are based on the strength of the firm working capital.
Role of the Financial Manager
By: RENITA DUBEY | 16/06/2008 | ManagementWith the rapidly changing business environment and highly competitive environment ,the ever changing market situations call for the ability of Financial manager who can react quickly,coordinate and adjust according to the changing business scenario.However to ensure better management of all the functions of organisation,the role of the finance manager is imperitive and cannot be overemphasised.Hence effective Financial management is important and this can be done only by a Finance manager.