Constant payout ratio, Finance Basics

Constant payout ratio

1. This is whereas the firm will pay a fixed dividend rate as like 40 percent of earnings. The DPS would consequently fluctuate as the earnings per share changes.

2. Dividends are straightly dependent on the firm's earnings capability and if no profits are made not dividend is paid.

3. This policy generates uncertainty to ordinary shareholders especially who such rely on dividend income and they might demand a higher necessary rate of return.

Posted Date: 1/31/2013 2:21:27 AM | Location : United States







Related Discussions:- Constant payout ratio, Assignment Help, Ask Question on Constant payout ratio, Get Answer, Expert's Help, Constant payout ratio Discussions

Write discussion on Constant payout ratio
Your posts are moderated
Related Questions
Profitability Index or P.I. P.I. (benefit-cost ratio) = Present value of inflows / Present value of cash outlay Whether P.I. is greater than 1.0, invest and whereas less th

Ask question #MinimQuestion You are the financial accountant of Donald Bhd, a manufacturer and wholesaler of soft drinks. Donald Bhd is in direct competition with Fizz Bhd and Po

Asset Based Valuation  This method acquires into account the entire business along with reference to its assets and then divides the resultant value via the number of shares i

Discuss business taxes and their importance in financial decisions

Benefits Ordinary Share Capital - Financing Benefits of using ordinary share capital in the financing They facilitate projects particularly long-term projects since they

Investment  Attributes/  Factors  Influencing  Selection  of  Investment In  choosing specific  investments,  investors  would require definite  ideas  regarding  features


Floatation of New Shares Rules for floatation of new shares The company must contain an issued share capital of at least Kshs.20 M. The company must contain c

Debtors Collection Period - Formula Fomula is given below: Debtors collection period = 365/ Debtors turnover Or (365 x Average debtors)/ Annual credit sales This

Turnover Ratios Turnover Ratios/efficiency/asset management ratio Turnover ratio shows the efficiency along with that the firm utilized the asset or resources at its dispos