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Explain the following factor affecting the dividend decision of a company: Cash flow position - Business Studies

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Question

Explain the following factor affecting the dividend decision of a company:

Cash flow position

Explain

Solution

Strong cash flow production and liquidity reserves can allow companies to pay dividends to shareholders without compromising operational and investment needs. Management considers the company's cash flow condition, future cash needs, and financial commitments when deciding dividend distributions to shareholders. 

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2023-2024 (February) Delhi Set - 3
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