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Long-Term Financing/ Dividend Policy and Retained Earnings

Why is the cash position of a company important, when deciding to create a dividend policy?

© BrainMass Inc. brainmass.com August 17, 2018, 10:43 am ad1c9bdddf

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The cash position of a company is an important factor when deciding to create a dividend policy. The amount of dividend paid by the company may have positive or negative information content for the stock market. Therefore, a company would like to pay more dividends to send positive signals to the market. However, the company would like to retain a substantial portion of the earnings of ...

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This post discusses why is the cash position of a company important, when deciding to create a dividend policy.

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