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If you were the CFO of a company, public or private it doesn't matter, what would...

If you were the CFO of a company, public or private it doesn't matter, what would your dividend policy be? Explain in detail!

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Answer #1

ceo of a company I would follow the residual Dividend policy.

This implies that the dividend would be paid only if there are no other opportunities for alternative for investment available. My first priority would be to use earnings for cash flow expenditures and for the growth of the business. If there are investment opportunities available which will help the business to grow the files would be directed therefore rather than being paid out as dividend.

This will ensure that the funds are used for business growth and it will also help the company to achieve the objective of maximizing the wealth of the shareholders not in the short term but in the long term Horizon.

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