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Outline the reasons that may constrain a company from paying dividends to its shareholders at the end of a financial year.

      

Outline the reasons that may constrain a company from paying dividends to its shareholders at the end of a financial year.

  

Answers


Kavungya
• Ability to raise funds from other sources. If a firm has no ability to raise funds from other sources it will pay lower dividends.
• Expectations from the investors.
• Legal requirements i.e. insolvent firms are not to pay dividends.
• In case there is need to finance acceptable or viable projects. This will obviously lead to payment of low dividends
• If the firm profitability is unstable the amount of dividends paid will be lower.
Kavungya answered the question on May 5, 2022 at 13:51


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