what is Cash dividend , Finance, Other Engineering

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Cash dividend

Companies mostly pay dividends in cash. A company should have enough cash in its bank account when cash dividends are declared. If it does most have enough bank balance, arrangement should be made to borrow funds. When the company follows a stable be made to borrow funds. When the company follows a stable dividend policy, it should prepare cash beget for the coming period to indicate the necessary funds, which would be needed to meet the regular dividend payment of the company it is relatively difficult to make cash planning in anticipation of dividend needs when an unstable policy is followed.

The cash account and the reserves account of a company will be reduced when the cash dividend is paid. Thus both the total assets and the net worth of the company are reduced when the cash dividend is distributed. The market price of the share drops in most cases by the amount of the cash dividend distributed.

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