MS-04 Jan June 2017

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SAMPLE ASSIGNMENT JAN JUNE 2017 MS-04 Course Code MS - 04 Course Title Accounting and Finance for Managers Assignment Code MS-04/TMA/SEM - I/2017 Assignment Coverage All Blocks To buy MBA assignments please use below link https://ignousolvedassignmentsmba.blog.spot.in / KIAN PUBLICATION [email protected] [email protected] [email protected] School of Management Studies INDIRA GANDHI NATIONAL OPEN UNIVERSITY MAIDAN GARHI, NEW DELHI – 110 068

Transcript of MS-04 Jan June 2017

Page 1: MS-04 Jan June 2017

SAMPLE ASSIGNMENT JAN JUNE 2017

MS-04

Course Code MS - 04

Course Title Accounting and Finance for Managers

Assignment Code MS-04/TMA/SEM - I/2017

Assignment Coverage All Blocks

To buy MBA assignments please use below link

https://ignousolvedassignmentsmba.blog.spot.in/

KIAN PUBLICATION

[email protected]

[email protected]

[email protected]

School of Management Studies INDIRA GANDHI NATIONAL OPEN UNIVERSITY

MAIDAN GARHI, NEW DELHI – 110 068

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This is sample copy, Only for viewing. You cannot copy or take print of this copy.

1. “Accountancy is an Information System” do you agree? Substantiate your answer with reasons. How does an Accountant help in planning and controlling a large commercial organisation? Explain. I agree with the above statement because an --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------information system (AIS) is to collect, store, and process financial and accounting data and produce -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------systems are computer-based.

Functions of ---------------------------------------- System

Accounting ------------------------------------------------------- basic functions:

The first function of an --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------, recording the transactions in journals, and posting data from journals to ledgers.

The second function of an ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- producing managerial reports and financial statements.

The third function ------------------------------------------------------------------------- to accurately record and process data.

Parts --------------------------------------------------- System

An accounting ------------------------------------------ six basic parts:

People who use the system------------------------------------------------------------------ analysts

Procedure ---------------------------------------------------------------------------------------------, and processed

Data --------------------------------------------------------------------------- into an AIS

Software ------------------------------------------------------------------------------------------------- data

Information --------------------------------------------------------------------------------------- the AIS

Internal ----------------------------------------------------------------------------------------- data

The ------------------------------------------------------- Systems

Because an AIS stores and provides ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------important to AIS reliability:

Security - Access to ----------------------------------------------------------------------- to those authorized. Confidentiality - The protection -------------------------------------------------------- disclosure. Privacy - The collection, use, and ------------------------------------------------------------ is done in an appropriate manner. Processing integrity - The accurate, --------------------------------------------------------------------------- authorization. Availability - The ---------------------------------------------------------------------------------- obligations.

There is no doubt about the fact that accounting is an information system. The accounting information is highly useful for different groups of persons. No organisation can --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------, but also the other groups of persons are interested in getting accounting information. Various groups of persons alongwith their requirement for such information are discussed below in the large organisation.

1. Proprietors: Proprietors who have invested their --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------significant to understand profitability and financial soundness.

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2. Managers: In case of --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------parameters are related to accounts and hence accounting information is of high interest to these --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------of the enterprise in the period to come.

3. Creditors: Creditors are those persons from whom the company has taken loans or credit. These people are also interested to know the financial status of the --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------amount.

4. Government: The requirement on the --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------the accounts of any organisation.

5. ---------------------------------------: Prospective investors would also like to know the status of profitability and performance of a company before investing in the business. --------------------------------------------------------------- taking decision.

6. Employees: Employees are also --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------interest would further increase.

7. Citizens: General public would -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------also as a tax-payer and voter.

Role of ------------------------------------------------------ Controlling

An accountant plays a vital help in planning and --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------is explained below:

1. Planning: The planning function of management involves defining goals and course of actions to achieve them through formulation of appropriate policies. --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------for effective planning process.

2. Controlling: Management function of controlling includes evaluation of performance so as to ascertain that the course of actions is leading to the attainment of --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------. Any information from the accountant is of high value to the management since ultimate objective of any --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------of the organisation.

3. Coordinating: Coordinating process is --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------figures which is maintained by the accountant. These statements are used to interlink various departments. For example, purchase department has to purchase raw materials for --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------. Thus the financial details are used to interlink various departments.

4. Organising: Whole organisation is divided into --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------audit for each of these centres would help in effective organising the whole organisation into a profitable establishment.

5. Motivating: Employees should be --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------to take actions to promote, demote, reward or penalize.

6. -----------------------------: Communication is the process of transmitting information both inside and outside the organisation. The requirement of the management in --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------prospective investors etc.

Accountant -------------------------------------------------------------------- organization

An accountant performs financial functions related to the collection, accuracy, recording, analysis and presentation of a business, organization or company's financial operations. The --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------, entry and report generation. Middle to larger sized companies may utilize an accountant as an adviser and financial interpreter, who may present the company's financial data to people within and outside of the business. Generally, the accountant can also deal with third parties, such as vendors, customers and financial institutions.

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Financial ------------------------------------

The accounting structure of a --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------. The accountant ensures that financial records are maintained in compliance with lawful and accepted procedures and policies on the corporate level. The financial information for any organization should be kept in a pristine system --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------, implementing and maintaining financial data bases, as well as establishing and monitoring control procedures.

Analysis -----------------------

As analysts, accountants may perform certain types of analysis using financial data that is used to assist in making business decisions. From deciding which kinds of --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------and expenditure trends, financial commitments and future revenue expectations. The accountant also --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------, while providing strategic recommendations for specific financial problems or situations.

Financial --------------------------------------------

Accountants typically prepare --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------accurate quarterly and year-end closing documents. Reports compiled may be used in connection with the continual --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------and operation of a company's financial software and systems, such as Hyperion, Excel and CODA Financial Management.

Compliance

An accountant may also be responsible for ensuring that all financial reporting deadlines are met, internally and externally. For example, quarterly, semi-annual and annual reports --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------coordinates the audit process by assisting with financial data preparation.

External ------------------------- Affiliations

Often, accountants must work with --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------consultant, auditor and tax service professional. Corporations, nonprofits, organizations and governments use management accountants to record and analyze financial information of the businesses in which they are employed. They usually advise company executives, creditors, stockholders, --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------an accountant is employed, in connection with taxation and government regulations Follow-Up

Once the system is designed and developed, it needs monitoring to ensure it is functioning properly. Changes must be made according to the organization's needs.

From the above discussion, it can be concluded that an accountant helps in planning and controlling a large commercial organisation.

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The other expenses per month are: Rent Rs. 1,000, Depreciation Rs. 1,000, Misc. Expenses Rs. 500 and Commission 1% of sales. Of the sales, 80% is on credit and 20% for cash. 70% of the credit sales are collected in one month and the balance in two months. Debtors on March 31, 2017 represent Rs. 6,000 in respect of sales of February and Rs. 20,000 in respect of sales of March. There are no debt losses. Gross profit on sales on an average is 30%. Purchases equal to the next month’s sales are made every month and they are paid during the month in which they are made. The firm maintains a minimum cash balance of Rs. 10,000. Cash deficiencies are made up bank loans which are repaid at the earliest available opportunity and cash in excess of Rs. 15,000 is invested in securities (Interest on bank loans and securities is to be ignored). Outstanding liabilities remain unchanged.

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3. Taking a suitable example and explain how the semi-variable costs will be segregated into fixed and variable using the Scattergraph Method. The semi-variable overhead gives a lot of ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- of semi-variable overhead into fixed and variable element. The following methods are used to segregate the semi-variable overheads. To segregate semi variable cost into ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------method, we can carry out this. Methods for ----------------------------------------------- and Variable Several methods are used for segregating --------------------------------------------------------------------------------------- techniques that are found in practice and they may be listed as follows:

1. High ------------------------------------ method 2. Scatter ----------------------------------------- 3. Least --------------------------------------- method. 4. Accounting --------------------------------------- approach 1. High ------------------------------ Methods: This approach ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------and the lowest for the periods under review. The result of this division is the estimated variable cost per unit.

Then, the average activity level is computed -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------cost for the average activity level. The variable cost is computed by multiplying the average activity level by the variable cost per unit as determined above.

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As an illustration, assume that a --------------------------------------------------------- units and 10,000 units were produced:

Since insurance remained constant ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- a fixed and variable component.

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2. Scatter----------------------------------------------: Another approach to ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------levels such as direct labour hours, units of output, percentage of capacity or direct labour cost) are plotted along a horizontal line, the x-axis.

A straight line is fitted to this --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------fixed cost. The following examples illustrates the scatter-graph method.

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------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- The first step in constructing a scatter-graph requires plotting each of the observation on graph paper. The second step is fitting a regression line or trend line to the data. In the chart, line B is plotted by visual inspection. Ideally, there should be as many dots above as below the line.

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Another line is drawn parallel to -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------. The triangle formed by line A and B shows the increase in the expenses as direct labour hours increase.

Fixed --------------------------------------------------------------

Fixed expenses per ------------------------------------------------

Subtracting the ------------------------------------------------------------------------------ = Rs 7, 80,000

Rs 7, -------------------------------------------------------------------- of the expenses.

Variable cost per direct labour = ---------------------------------------------------------- per Hour.

Thus, expenses consist of -------------------------------------------------------------- unit direct labour hour.

On the scatter-graph, although the -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------a line to the points in such a way that the areas above and below the line are about equal. Interaction of the trend line with the cost axis determines the fixed component. The variable components can be found by -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------the line would be difficult. A definite trend upward is apparent but exactly where the trend line should fall is not so easy to locate.

The scatter-graph is a simple -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------. It has within itself a measure of reliability. Correlation, if any, that exists between cost and --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------. Fitting the trend line by observation introduces a personal bias which can be removed only by fitting the line mathematically.

3. Least ----------------------------------- Method: The method of least -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------estimate of fixed and variable costs.

The answer under regression -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------variable components. However, this method has drawbacks; it fits a straight line to any set of cost data -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------and time-consuming.

4. ------------------------------------ Approach: This approach to cost behaviour -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------by the accountant using good judgment, knowledge, and experience. This approach is simple and inexpensive but in its simplicity lies its inherent weakness.

The results obtained are not accurate and may happen to be mere guesses. To improve this method, costs over a period of time can be watched. The time selected must be long -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------fixed and variable costs. Costs which appear to be semi -variable must be set aside for further analysis into fixed and variable components.

Example: The following are the ---------------------------------------------------------------------------------- corresponding machine hours:

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Analyse the --------------------------------------------------------------------------- and variable element.

Solution: Computation of ---------------------------------------------------------------------------------------------- to Range Method.

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4. Aditi Ltd. is considering the selection of one a pair of mutually exclusive investment projects. Both would involve purchase of machinery with a life of 5 years. Project 1 would generate annual cash flows (receipts less payments) of Rs. 2,00,000; the machinery would cost Rs. 5,56,000 and have a scrap value of Rs. 56,000. Project 2 would generate annual cash flows of Rs.5,00,000; the machinery would cost Rs. 16,16,000 and have a scrap value of Rs. 4,31,000. Company use the straight line method for providing depreciation. Its cost of capital is 15% per annum. Assume that annual cash flows arise on the anniversaries of the initial outlay, that there will be no price changes over the project lives and that acceptance of one of the projects will not alter the required amount of working capital.

You are required to: (a) Calculate for each project: (i) the accounting rate or return (ratio, over project life, of average accounting profit to average book value of investment) to nearest 1%. (ii) the net present value (iii) the internal rate or return (D.C.F. yield) to nearest 1%, and (iv) the pay back period to one decimal place, and

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(b) State which project you would select for acceptance, if either, giving reasons for your choice of criterion to guide the decision. Ignore taxation. This example illustrates the ------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------because it has a higher net present value when

the project cash flows are discounted at the cost of capital. On the other hand project 1 has the higher internal rate of return.

To decide which method of ranking is correct it is necessary to consider the assumed objective of the firm, which is to maximise

the wealth of the providers of finance--------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------the net present value calculations. It is

these cash surpluses which improve the wealth of the owners of the firm.

IRR provides a relative (as --------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------lives.

IRR makes an inconsistent --------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------reinvestment rate i.e. the assumption underlying

NPV.

Accordingly -------------------------------------------------------------------------------- justified by the following argument:

Project 1 is relatively more profitable than -------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------to receive the large cash surpluses

from a large adequately profitable project --------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------per cent on a penny.

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5. “Dividend can be paid only out of profits”. Explain this statement and also discuss your role as a Finance Management in matters of dividend policy?

The Companies Act, 2013 is based ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------and not out of the capital of the company. But there are exceptions in Section 208 –

(1)Where any shares in a company are ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------profitable for a lengthy period, the company may-

(a) pay interest on so much of that share capital as is for the time being paid up, for the period and subject to the conditions and restrictions mentioned in sub- sections (2) to (7); and

(b) charge the sum so paid by -------------------------------------------------------------------- or building or the provision of the plant.

(2) No such payment shall be ----------------------------------------------------------------------------------------- a special resolution.

(3) No such payment, whether authorised by the articles or by special resolution, shall be made without the previous sanction of the Central Government. The grant of ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------specified in this section.

(4) Before sanctioning any such payment, the Central Government may, at the expense of the company, appoint a person to inquire into, and ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------of the costs of the inquiry.

(5) The payment of interest shall be ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------the work or building has been actually completed or the plant provided.

(6) The rate of interest ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------, by notification in the Official Gazette, direct.

(7) The payment of ----------------------------------------------------------------------------------------- in respect of which it is paid.

(8) Nothing in this section ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ .) or the Indian Tramways Act, 1902 , (4 of 1902 .) applies.

In India, the issue of distribution of dividends out of capital gains was raised in Factors(P.) Ltd.v. Commissioner of Income Tax, the assessee in this case contended that ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------to the capital asset so it would be contrary to the provisions of the Companies Act.

If the accretion to the capital is not ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------lead to the reduction of the capital. The assessee cited the Gower’s Principle of Modern Company ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------assets over liabilities.

Dividend decision is ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------policy so that the market reaction is favourable. It is a continuous activity spread over a period of --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- dividend policy formulation and implementation:

1. It is important ----------------------------------------------------------------------------- to give regular dividend to its shareholders.

2. It can decide whether ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ of earnings as in case of preference shares.

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3. It can ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------. It is known as fixed payout ratio option.

4. Property dividend or -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- other companies held by it or by converting retained earnings into bonus shares.

Factors --------------------------------------- Decision:

Dividend decision determines the division of earning between payments to shareholders and retained earnings. It has the strong influence on the financial ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------affect the dividend decision of a company are discussed below:

1. Legislation: Certain ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------are inadequate or absent then the company may declare dividends out of the accumulated profits. It also ensures that a certain percentage of profits less than 10 percent are transferred to the reserves of the company.

According to Income Act, a ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------companies from the compulsory distribution of profits. The legislation pertaining to dividend should be followed otherwise the dividend decision would be ultra-virus.

2. ----------------------- Earning: The amount of earnings plays an important role in dividend decision-making. A rational approach should be adopted wherein amount and the nature of earnings should be considered.

3. ---------------- Status: The dividend ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------, paying cash dividend is avoided.

4. Investment ------------------------------------ preferences: From the earnings a company has to decide how much it can share. Whether it should share a major amount or it should not share any money and keep the entire amount for its future activities, is important to decide. Retention of ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------of earnings over the payment of dividend. Investors have to pay taxes ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------of earnings.

Capital gains tax is lower than the tax on dividend and it is payable only when the share are actually sold i.e. deferred payment of taxes. If a company has paid ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------as per their income slab and if they purchase the right shares, they have to give full money. Otherwise if the company instead of giving dividend, issues the right shares to its existing shareholders, tax on ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------in lower tax-slab like to have dividend.

5. Capital Market: A company can follow liberal attitude if the capital market is comfortable and the company has easy access to it. If it does not have access due to high cost of capital then it would like to follow conservative policy on dividend.

6. Profit ------------------------------- earnings: If a company is getting high rate of return on its investment, it will have good profit and hence it can give dividend. Similarly if --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------rate, it cannot afford to distribute dividend. In that case, it would like to retain the earnings for future requirements.

7. Inflation: Inflation is ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------power of the firm.

8. Control: A company may ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------debentures, financial risk of the company would increase. Thus it may like to retain the earnings or goes for lesser dividend to payout ratio.

9. Contractual Obligations: Certain ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------possible insolvency of the firm.

Role --------------------------------------------- Policy

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Any organization aims to ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------among shareholders Corporate management main ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------role in advising the management. But the decision is always taken by board of directors only. The ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------to its owners. As a finance managers, following decisions would be analysed.

I will analyze existing ---------------------------------------------------------------------------- of the company.

I would have to -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- of dividend is reduced it will effect shareholders only.

A workable ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------time horizon

I will follow all ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------and needs

I would also ----------------------------------------------------------------------- paid every year, that is, stable dividend

Also, whether a ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------or as property dividend or bonus shares dividend.

Factors ---------------------------------------------- policy Factors that ---------------------------------------------- are as follows:-

(a) Ownership ------------------------------ Where ownership is ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------market acceptance of the stock as:-

Current --------------------------------------- holders Tax matters ------------------------------------ holders

The objective of the ---------------------------------------------------------------------------------- be geared to investors in general.

(b) Firm---------------------------------------considerations

Firm----------------------------------------- include:

Business ----------------------------------- · Contractual ------------------------------------- restrictions · Risk of ----------------------------------- of organization · Post ------------------------------------------ relationships · Future --------------------------------------

(c) ------------------------- of Business To decide a dividend policy, ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------the regular basis only. (d) Attitudes ------------------------------------- management Some organizational may be niggardly in dividend payments whereas take it liberally. the attitude of management also affects it can easily ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------of earnings also (e) Investment -------------------------------

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Several organizations retain ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------always look at the investment opportunities before deciding dividend policy. (f) Desire ----------------------------------- and liquidity Some companies ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------dividend decision. (g) Inflation Inflation means increase in ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------also affects profits of the company. In such situation, current income becomes important and shareholders want dividend out of it this includes a higher pay out ratio.

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This is sample copy, Only for viewing. You cannot copy or take print of this copy.