Legal rules - factors influencing dividend, Finance Basics

Legal Rules - Factors Influencing Dividend

a) Net purchase rule

States that dividend may be paid from company's profit either past or present.

b) Capital impairment rule

Prohibits payment of dividends from capital i.e. from sale of ssets. This is liquidating the firm.

c) Insolvency rule

Prohibits payment of dividend whenever company is insolvent.  Insolvent company is once where assets are less quite than liabilities. Insolvent company is one whereas assets are less quite than liabilities.  During such a case every earnings and assets of company belong to debt holders and not any dividends is paid.

Posted Date: 1/31/2013 2:56:22 AM | Location : United States







Related Discussions:- Legal rules - factors influencing dividend, Assignment Help, Ask Question on Legal rules - factors influencing dividend, Get Answer, Expert's Help, Legal rules - factors influencing dividend Discussions

Write discussion on Legal rules - factors influencing dividend
Your posts are moderated
Related Questions
Your daughter is a beginning freshman in high school. By the time she enters her freshman year in college, you would like to have savings accumulated to pay her tuition for her nex

Actions of Shareholders in Agency Conflict a) Disposal of assets required like collateral for the debt in this. In this case the bondholder is exposed to more risk becaus

Example of Theoretical Value As a result of the purchase of an asset, the income stream will rise by of £1,000 per annum for 25 years.  By assuming a discount rate of 20 perce

Example of Miller-Orr Model XYZ's management has put the minimum cash balance to be equivalent to Sh.10, 000. The standard deviation of daily cash flow is of Sh.2, 500 and the

Basic EOQ Model The basic inventory decision model is Economic Order Quantity or called EOQ model. This model is specified via the following equation as: Whereas:Q is

Relationships and interactions among money, bond, stock and mortgage markets

Dividend Basis Valuation Ownership of shares in entities - The owner to obtain a cash flow consisting of future dividends and the value of a share must correspond to the recen

The organization performed very well during the last year and generated profit in each segment. In the food and beverage segment, the company has made 30% net profit and in rooms a

Capital Asset Pricing Model (CAPM) CAPM is a methods that is used to establish the required rate of return of an investment provided a particular level of risk.  According to

MRP systems and Functions of MRP systems Where dependent demand exists, for example between finished product and its constituent parts, item forecasting or inventory control t