Dividend policy determine was question of earning will be paid out to stop holder and what question will be retained in the business to finance long term growth dividend constitut the cash flow that acute to equity Honda where has retained earning are one of the most significant stores of. Pause financing the corporate growth growth dividend and growth our Dividend policy determine was question of earning will be paid out to stop holder and what question will be retained in the business to finance long term growth dividend constitut the cash flow that acute to equity Honda where has retained earning are one of the most significant source of fund for financing the corporate growth both dividend and growth are desirable but are conflicting goals to each other higher dividend means less retained earning and Vice versa this portion is quite challenging for the finance manager and necessitate the need to establish a dividend policy in the firm which will evolve a pattern of dividend fat payment having no adverse effect on future action of the farm the formulation of dividend policy causes many problems on the one hand theory would seem to dictate that the firm should retain all fund which can be employed at higher rate than kept the capitalisation rate on the other hand stockholder preference must be considered two important consideration evolve from the other person weather on a lead are more important than a need of the firm it is not easy to sustain the extent to which the shareholder best interest or Dzire effect Dividend policy because of the following difficult is in determining the dividend need of the stockholder are related to the text position capital gain current income it is so difficult to locate exactly what more affect the interest of the shareholder current income requirement alternative use of fund or text consideration existing column list of interest among shareholder Dividend policy maybe advantages to one and not to others never the less investor expectation of dividend are mainly based on the factor reduction of uncertainty due to retain current running by way of dividend indication of company strength and sound position that responses confidence in investor to meet the need of current income secondly need of the farmer easier to determine which is the centre of attention for the policy makers
