Question

'Dovex' was a large company with a renowned name in healthcare industry, specialising in the development and production of life saving medications and medical devices. With a strong reputation for ethical practices, 'Dovex' attracted a large number of investors who had great faith in the company's future. This allowed 'Dovex' to raise capital easily from the market whenever expansion or new projects were to be undertaken. As a result, it could pay high dividends to the shareholders. The factor affecting dividend decision discussed above, which allowed 'Dovex' to pay high dividends to the shareholders is: 

Options

• Cash flow position

• Stock market reaction

• Legal constraints

• Access to capital market

Answer 1

Access to capital market

Explanation:

'Dovex' has good access to the capital market, as seen by its ease of raising funds from the market. Because of this access, the business is able to raise money for new initiatives or expansion, which enables it to give shareholders large dividends.