Dividends

• What are dividends?

  Distributions of profits to shareholders
• Who decides the size of dividends?

  Management of the company
• How are dividends usually paid?

  In cash on an annual, semi-annual, or quarterly basis
• Where are dividends accounted for?

  On the statement of financial position
• What are retained earnings?

  Profits left after dividends are paid
• What is the declaration date?

  The date management announces a dividend
• What is the significance of the ex-dividend date?

  It determines eligibility for the upcoming dividend
• What happens on the ex-dividend date?

  Shareholders who buy shares do not qualify for dividends
• How might share prices be influenced on the ex-dividend date?

  Share prices may fall due to reduced attractiveness
• What is opportunity cost in relation to dividends?

  Potential benefits lost by paying dividends
• What is short-termism in the context of dividends?

  Focus on immediate shareholder satisfaction
• How can paying dividends affect a company's long-term sustainability?

  It may divert focus from long-term investments
• What are the key dates related to dividends?

  • Declaration date: Management announces dividend
  • Ex-dividend date: Shareholders must own shares to qualify
  • Payment date: Actual date dividends are paid
• What are the potential issues with paying dividends?

  • Opportunity cost: Lost investment opportunities
  • Short-termism: Focus on immediate gains over sustainability