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Equity Capital and Dividend Policies Assignment Help

Equity Capital and Dividend Policies Homework Help to Understand Finance Ably 

When it comes to financing, almost everything is difficult. Students are unable to cope with the subject often due to the problems presented that often complicates the matter. Moreover, various topics pose various levels of difficulties that make finance problematic. Equity capital and dividend policies are two such topics. Both these are inter-related and affect the functioning of a company massively. Thus, it becomes an integral part of finance, the understanding of which becomes absolutely crucial. With equity capital and dividend policies homework help, this can be eradicated.

Learning about equity capital:

Equity capital is defined as the portion of the capital of an organization which investors purchase for a portion of the ownership of the company in the form of shares. These investors have held over the management. While they enjoy the benefits of ownership, they also bear the risks as well. Equity capital and dividend policies assignment help can help explain it better.

Advantages of equity capital

There are quite a few advantages of equity capital. These are as follows:

  • Since there are no maturity dates, the firm is not obliged to redeem the equity shares from the investors.
  • The credit of the company is raised with the equity capital. As more number of equity shares are raised, it acts as a cushion for money lenders to offer more money to the company.
  • There will be no legal consequences for a company if the skip paying the equity dividends due to cash deficit.

What are dividend policies?

The dividend policy is the set of guidelines adopted by a company that decides how much of its earnings it will pay out to its shareholders. The dividend irrelevance theory is based on such a policy that allows the company to sell its equities for cash. With equity capital and dividend policies assignment help, such factors and theories can be better understood.

What are the various types of dividend policies available?

There are generally three types of dividend policies that companies adopt. These are: Residual, stable and constant. While a residual dividend policy is highly volatile, however, for investors it is the policy that companies should adopt as the company pays out the leftover after paying for expenditure and working capital needs.

Stable dividend policy is the popular one in use. In this, steady dividends are paid out every year which attracts more number of investors. The market doesn’t affect the dividends; when shares are up they receive dividends and even when it is down, they receive dividends. The constant dividend policy involves the payment of the company’s earnings each year. So, if earnings are up, investors receive more, but if it is down, they receive less.

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