CBSE 2025 · Region 1 · Set 1 · Q30

VK Ltd. is a fast moving consumer goods company. It has

shareholders spread all over India. Most of its shareholders

depend upon a regular income from their investment.

VK Ltd. has been earning consistent profits. The

management of the company keeps in mind the preference of

the shareholders regarding payment of dividend. Since its

shareholders, in general, desire that at least a certain amount

is paid as dividend to them every year, the company declares

dividend every year.

Atul, the Finance Manager of the company identified

promising growth opportunities. He suggested to the Chief

Executive Officer to retain the earnings to finance the

required investments instead of declaring dividend every

year. For this, the Chief Executive Officer decided to call a

General Body Meeting of the shareholders.

(i)

Identify two factors affecting dividend decision discussed

(i)

above.

(ii)

State two other factors that affect the dividend decision of

(ii)

a company.