Determinants of Dividend Policy Dividend policy refers to the approach a company takes to distribute profits back to its shareholders. While some companies might prefer to reinvest most of their profits back into the business, others may opt to distribute a substantial portion of the profits as dividends. These are the various determinants of dividend
Capital budgeting can be defined as investment appraisal, is a critical process in corporate finance and business management. It involves the decision-making process used by companies to determine whether major long-term investments or projects are worth funding through the firm’s capitalization structure (debt, equity, or retained earnings). Need of Capital Budgeting Capital budgeting decisions are
What is Marketable Securities? Investment in marketable securities is an investment strategy undertaken by corporations or individual investors who purchase securities that can be easily converted into cash. These marketable securities, which include stocks, bonds, or money market instruments, are typically short-term, highly liquid investments that are readily marketable and carry minimal risk. Marketable securities
Influence of Credit Policy A company’s credit policy has a significant impact on its operations, sales, profitability, and cash flow. Credit policy will directly influence sales, investment levels, bad-debt losses, and collection costs. These are the factors that influence credit policy: Sales Sales vary directly with the extent to which credit terms are liberalized. The
What is Debt Covenant? Debt covenants, also called banking covenants or financial covenants, are agreements between a company and its creditors that the company should operate within certain limits or certain conditions and parameters which are fixed for borrowing. A debt covenant is a promise in an indenture, or any other formal debt agreement, that
Major issues in corporate governance reports have included the role of the board, risk management, and corporate social responsibility, the quality of financial reporting and auditing, and directors‘ remuneration. Issues of Corporate Governance Let’s discuss some basic issues of corporate governance: Ethical Issues Ethical Issues are those issues that have a reverse impact on a
Components of Financial Policy The financial policy maintains a balance between all aspects of business with the help of financial policy a firm easily improves business performance. The main components of financial policy are as follows: Financial Planning Financial planning means a determination of the total funds required by the firm for a particular time
Factors Determining Working Capital These are the factors determining working capital explained below in detail: Nature of Industry The composition of an asset is a function of the size of a business and the industry to which it belongs. Small companies have smaller proportions of cash, receivables, and inventory than large corporations. This difference becomes
Meaning of Working Capital In accounting, W. C. is the difference between the inflow and outflow of funds. It is the net cash inflow. W.C. is defined as the excess of current assets over its current liabilities and provision. Current assets are those assets that will be converted into cash within the current account period
What are the Sources of Finance? The use of short-term sources of finance is not confirmed by the manufacturing and service sectors. But short-term sources of finance are used by the government and banks also. For the government short-term source of finance is treasury bills of 91 days, 182 days, and 364 days while for
