Definition: According to the Walter's Model, given by prof. James E. Walter, the dividends are relevant and have a bearing on the firm’s share prices. Also, the investment policy cannot be separated from the dividend policy since both are interlinked. Walter's Model shows the clear relationship between the return on investments or internal rate of return (r) and the cost of … [Read more...] about Walter’s Model
Proof of Miller and Modigliani Hypothesis
Definition: Miller and Modigliani Hypothesis or MM Approach supports the “dividend irrelevance theory”, stating that the dividends are irrelevant and has no effect on the firm’s share value. Also, it is believed that it is the investment policy that increases the value of the shares and hence should be given more importance than the payouts to the shareholders. To justify … [Read more...] about Proof of Miller and Modigliani Hypothesis
Miller and Modigliani theory on Dividend Policy
Definition: According to Miller and Modigliani Hypothesis or MM Approach, dividend policy has no effect on the price of the shares of the firm and believes that it is the investment policy that increases the firm’s share value. The investors are satisfied with the firm’s retained earnings as long as the returns are more than the equity capitalization rate “Ke”. What is an … [Read more...] about Miller and Modigliani theory on Dividend Policy
Dividend Policy
Definition: The Dividend Policy is a financial decision that refers to the proportion of the firm’s earnings to be paid out to the shareholders. Here, a firm decides on the portion of revenue that is to be distributed to the shareholders as dividends or to be ploughed back into the firm. The amount of earnings to be retained back within the firm depends upon the availability … [Read more...] about Dividend Policy
Corporate Restructuring
Definition: The Corporate Restructuring is the process of making changes in the composition of a firm’s one or more business portfolios in order to have a more profitable enterprise. Simply, reorganizing the structure of the organization to fetch more profits from its operations or is best suited to the present situation. The Corporate Restructuring takes place in two … [Read more...] about Corporate Restructuring
Intrapreneurship
Definition: An Intrapreneurship is the system wherein the principles of entrepreneurship are practiced within the boundaries of the firm. An intrapreneur is a person who takes on the responsibility to innovate new ideas, products and processes or any new invention within the organization. An intrapreneur is the individual who thinks out of the box and possesses the … [Read more...] about Intrapreneurship
Entrepreneurial Process
Definition: The Entrepreneur is a change agent that acts as an industrialist and undertakes the risk associated with forming the business for commercial use. An entrepreneur has an unusual foresight to identify the potential demand for the goods and services. The entrepreneurship is a continuous process that needs to be followed by an entrepreneur to plan and launch the new … [Read more...] about Entrepreneurial Process
Types of Entrepreneurs
Definition: An Entrepreneur is a person who has a role of an industrialist and forms an organization for the commercial use. He is a change agent who transforms the demand into supply by forecasting the needs of the society. Types of Entrepreneurs Innovative Entrepreneur: These are the ones who invent the new ideas, new products, new production methods or processes, … [Read more...] about Types of Entrepreneurs
Liquidation Strategy
Definition: The Liquidation Strategy is the most unpleasant strategy adopted by the organization that includes selling off its assets and the final closure or winding up of the business operations. It is the most crucial and the last resort to retrenchment since it involves serious consequences such as a sense of failure, loss of future opportunities, spoiled market image, … [Read more...] about Liquidation Strategy
Divestment Strategy
Definition: The Divestment Strategy is another form of retrenchment that includes the downsizing of the scope of the business. The firm is said to have followed the divestment strategy, when it sells or liquidates a portion of a business or one or more of its strategic business units or a major division, with the objective to revive its financial position. The divestment is … [Read more...] about Divestment Strategy