Question

Name the decision a financial manager taxes,keeping in view the overall objective of maximising shareholders wealth.explain any two factors which affect the decision??

Answer 1

Hey Ashish,

The answer to your question is 'dividend decision'. ​The following are the factors that affect the dividend decision.
i) Amount of Earning: A firm pays dividends out of its current and the past earnings. This implies that earnings play a key role in the dividend decision. A company having higher earnings will be in a position to pay a higher amount of dividend to its shareholders. In contrast to this, a company having low or limited earnings would distribute low dividends.
ii) Stable Earnings: When a company has a stable and a smooth earning, they are in a position to distribute higher dividend as compared to the companies who have an unstable earning. In other words, a company having consistent and stable earnings can distribute higher amount of dividends.