Of course, it begins with understanding, the types in the business, the theory of its policies according to experts, the effect of its policies on business risks, calculation and payment procedures. Let our knowledge of the dividend is more complete, see the following article!
What is a dividend? The term dividend is a form of profit-sharing or profit to shareholders within a certain period based on the number of shares held. That is a large stock dividend depending on the size of their respective owners.
In general, dividends in the business and the company is divided into several types based on the method of division. Refers to the notion of dividends above, here are some kinds of dividends in the business:
It is a payment method in cash gains and is taxed only on their spending in the current year.
Is the method of distribution of profit shares made through increasing the number of shares but reduce the value of each share to not change the capitalist market.
Is the method of distribution of profit share paid through business assets such as property, but this method is rarely used in business.
Is the distribution of profit shares declared and paid before the company completed posted annual profits.
Is the distribution of profit shares to shareholders in the form of a written agreement in which the company will pay the amount of cash in the future. Scrip dividends can be shaped flower or bloom and can be traded to other shareholders.
It is a profit distribution of shares issued when the board of directors will conduct the liquidation of the business and return all the remaining net assets to shareholders in the form of cash.
Some experts divide theories of dividend. This follows his theories by experts.
According to Modigliani and miller, the value of a company is not determined by the size of the dividend payout ratio but is determined by the net income before tax and corporate risk class.
In other words, the company's ability to generate profits from the assets of the company is the deciding factor for the value of the company.
By linter and Gordon, when dividend payout is low, the cost of equity capital will increase. This is because investors prefer dividends rather than capital gains.
Dividend policy theory according to Litzenberger and Ramaswamy, taxes imposed on dividends and capital gains. However, investors prefer capital gains for shareholders to defer payment of taxes.
There is empirical evidence that says that if there is a rise in the stock profit distribution will be accompanied by rising stock prices. As well as vice versa. This is another reason why investors prefer dividends rather than capital gains.
According to this theory, the shareholders have a different perspective on the profit distribution policy of a company's stock. A high dividend payout ratio is preferred by investors who need current income. While investors do not so need the money today prefer if companies hold the majority of the company's net profit.
The new company is growing very susceptible to increased debt. The ratio of debt to total assets growing company shows potential risks greater. It could result in financial distress.
Stock profit-sharing payment policies could be one source of conflict between the lender with shareholders and the results could lead to a debt agency costs.
Dividend restrictions in debt agreements the company can be risky for the low conversion of the dividend due to companies experiencing financial difficulties or cash.
Corporate managers often negate the profit distribution of shares, whereas it actually will be a burden on companies to pay more to shareholders than when they distribute profits stock in low quantities.
Negate the stock profit sharing is a bad choice for a company whose financial difficulties, because shareholders may feel aggrieved and ask for a larger share.
Companies that raise profit-sharing stock to investors when the debt is very high, it could be negative for the investor's perspective. This is because the dividend was given allegedly derived from the issuance of the forest or other investment funds by ignoring the interests of the debt payments. This certainly makes the company vulnerable to the risk of bankruptcy.
Companies that can provide a large share in profits with minimal debt dependents could be an attraction for another investor. The company will be considered to have the moral and financial capability to manage the company properly without the shackles of debt.
Business or company that has good financial management enable a bigger profit because production costs are lower.
Businesses can also affect the determination of the profit distribution policy of stock. Profitability often results from the use of fixed operating costs with increased sales.
Companies often invest the gains to further improve earnings in the future. This leads to reduced funding whereas the company so that investors get shares lower profit shares.
Share earnings policy dilemma is often an obstacle for the company's leaders. Dividends can not be decided only on the company's financial, but also should pay attention to the risks that can be generated.
Stock profits earned by each shareholder has a different nominal.
It is influenced by the number of shares held by each shareholder.
In determining the nominal received by each shareholder, the company uses the three basic elements of calculation, namely:
After the company's net profit is known, then the company will determine how many percent dividend payout ratio (DPR) which will be distributed to the shareholders. Dpr the amount determined by the general meeting of shareholders.
After these two things in mind, it can be calculated to obtain the amount to be distributed, with the following formula:
Dividend = x DPR net income (in percentage)
Furthermore, the company will make a calculation of how nominal that will be earned by the shareholders to determine first how the amount received by each share. With the following calculation:
Dividend per share = dividend: shares outstanding
More and more of the shares owned by the shareholders, the greater the dividend they will get.
If the company decides to distribute profit shares to shareholders, then some important dates need to be considered by the company, namely:
The announcement date is the date in which the company announced the form and amount of dividends per share to be received by the shareholders.
Besides, on this date, the company will also deliver when to schedule payments to be made.
On the record date, the company will record who those shareholders of the company name.
Shareholders who are enrolled will get the rights and receive dividends, while the shareholders whose names are not registered on the record date are not going to get the right to acquire it.
Is the last day of trading of shares is still attached to the right to get the dividend in cash or shares?
On this date, the stock trading that occurs is no longer attached to the right to share profits, so investors who buy shares at this date could not register his name on it.
The payment date is the date on which the company distributed shares profits predetermined shape and magnitude to the shareholders.
On this date, shareholders whose names already registered can take their profits right.