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What factors does a business take into account when making dividend decisions? Describe different types of...

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Finance

What factors does a business take into account when makingdividend decisions? Describe different types of dividendpolicy.  Based on the value of stocks using the GordonModel or Constant Dividend Growth Model, how do dividend paymentseffect stock prices? What are some of the potential problems thatmay arise from these decisions?

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Factors affecting dividend decision Growth and profitability of the firm The firms with strong growth and profitability maintain low payout ratios because these firms focus on high retention ratios Liquidity Liquidity often plays an important role because better the liquidity position of the firm better will be firms ability to pay cash dividend Cost of financing If the cost of financing is low financing dividend is easy Managerial    See Answer
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What factors does a business take into account when makingdividend decisions? Describe different types of dividendpolicy.  Based on the value of stocks using the GordonModel or Constant Dividend Growth Model, how do dividend paymentseffect stock prices? What are some of the potential problems thatmay arise from these decisions?

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