An Analysis on Debenhams

The dividend policy has grown over the years. This may be so that the company projects itself as a less risky share and thus also gaining investors faith. The investors buy its shares and thus increase its demand. This helps to gives positive signals to the investors signalling that the company is stable and can generate earnings steadily. This hypothesis is gains standing from the dividend hypothesis theory.

Based on the above income statement data (assume interest income is zero), the company's interest coverage ratio is

When a company decides to pay dividends, it has to be careful on how much it will be given to the shareholders. It is of no use to pay shareholders dividends

Within a company such as Debenhams, communication is a huge factor in successfully running a professional business. These types of customer communication are split into two different types; formal and informal. Whether this is communicating to employees or customers all types and forms of communication will be used. Verbal communication will be a daily way of communicating within Debenhams. The simplest way this is demonstrated is conversation, staff will make conversation with customers to learn more about what they are buying and why and to create a friendly, laid back environment. Ways staff will communicate only with each other is through meetings and presentations. These can be either separate or merged together, but the business is likely to have regular meetings (mainly with management) about sales and products and will then present any new products or changes in the business or in the singular shop to the staff.

Debenhams can be affected by this system as most of their goods and services will increase in cost, resulting to expensive products. It will no longer be affordable to some customers, eventually the stores profit will decrease including the number of customers too. However the zero rate system can be positive as some products can be charged with out VAT making it considerably cheaper.

Dividends are calculated on the Average Daily Balance and paid monthly (dividend rates are determined by the board of directors each month)

When a company generates a profit, management has one of two choices: They can either pay it out to shareholders as a cash dividend, or retain the earnings and reinvest them in the business.

The graph above shows a current ratio. It is used for measuring an ability of the company to pay off

| This assesses a company’s financial durability by examining whether it is at least profitable enough to pay off its interest expenses.

Because often dividends are perceived as spendable income (some stock holders look at stocks as a source of income as it is easier to get a dividend instead of selling the stocks). Sometimes investment opportunities are low, they reach the limit of their marketplace, so companies decides to distribute cash in the form of dividends. For some companies it is a way of showing that the company is stable financially and can fulfill the commitment of paying out a dividend. Also it is a way for companies to mitigate agency problems when they have excess cash.

For example, a ratio of five indicates a company’s income is five times higher than the interest expenses owed for that year (Investopedia, 2015b). NTICE ratios of 2.5 or higher are favorable and considered an acceptable risk for investors and creditors, while

Earnings per share (EPS) include common stock, preferred stock, unexercised stock options, unexercised warrants, and other types of convertible debt. Companies "with a large amount of convertibles, warrants and stock options, diluted earnings per share are usually a more accurate measure of the company's real earning power than earning per share' (Investor Words, 2009).

A dividend is a usually distributed in cash form to stock holders of a corporation approved by the board of director. It may also include stock dividend or other forms of payment. A stock dividend represents a distribution of additional shares to common stockholders. Dividends are only cash payments regularly made by corporations to their stockholders.

Once a company makes a profit, they must decide on what to do with those profits. They could continue to retain the profits within the company, or they could pay out the profits to the owners of the firm in the form of dividends. Once the company decides on whether to pay dividends, they may establish a somewhat permanent dividend policy, which may in turn impact on investors and perceptions of the company in the financial markets. What they decide depends on the situation of the

How to determine the most appropriate dividend policy has become one of the hottest topics in recent years as dividend decisions continue to have a significant impact on both investment and finance decisions (company’s performance overall), affecting financial managers considerations when deciding how much earnings to reinvest and how much to be paid to shareholders (Watson and Head, 2010). There are already many theories either supporting or criticising the impact of dividend decisions on a firm’s value. Litner (1956) indicated that dividends are paid by mature companies who have positive earnings instead of smaller firms and managers always target a long-term dividend payout that can be sustained. This essay will critically evaluate