Equity
(c) Share premium—ordinary Share premium
(d) Treasury shares Contra equity
(e) Share capital—preference Share capital
(f) Share premium—preference Share premium
19. The main factors that influence a company's dividend policy are:
- Earnings and cash flows - A company needs sufficient earnings and cash flows to pay dividends.
- Growth opportunities - Companies with good investment opportunities may retain more earnings.
- Financial flexibility - Companies need to maintain financial flexibility to fund operations.
- Shareholder preferences - Some shareholders prefer dividends while others prioritize capital gains.
- Industry practices - Companies follow industry norms and peer practices regarding dividends.
- Tax considerations