whether divident payout is mandatory for a ltd comp
3 Answer(s)
KARTHIK
Dividends are payments made to company shareholders from the profits of the company. If the company has not made a profit over a given period then it cannot pay a dividend. Most large public limited companies pay a dividend either once or twice a year.
A dividend is a reward to shareholders for investing in their company. It is up to the directors of the company to decide if and when a dividend can be paid to the company’s shareholders.
Jan 11 2014 05:03 PM
A dividend is a reward to shareholders for investing in their company. It is up to the directors of the company to decide if and when a dividend can be paid to the company’s shareholders.
Abhishek
it is not mandatory for a firm to pay dividends. Firms that pay dividends in past cannot decrease the dividends spontaneously as it will affect their stock price because it signals financial breakdown of the firm (signaling theory). For more information you can read Lintner's model on dividend payments. So, a dividend paying firm with substantial net profits decides not to pay dividends in current year can be troublesome it's stock price.
Feb 02 2014 11:22 PM