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Service tax is a tax levied by the government on service providers on certain service transactions, but is actually borne by the customers. It is categorized under Indirect Tax and came into existence under the Finance Act,
Once the vote is passed, a liability dividends payable is setup because the board of directors actually a note payable to the existing shareholders in the form of a dividend. The company then owes the shareholders this money.
The board of directors has to weigh many different strategic options when they think about declaring dividends. They have to make sure the company has enough operating cash as well as enough cash to invest in new operations and expansions.
The board also has to take into consideration investors. Many tech companies like Apple and Google have never given dividends up until recently. Most tech startup companies grow so fast that they need to keep their cash in order to maintain the steady business growth.
Investors are attracted to these companies because of potential stock price grow. Companies like GE and Ford are the complete opposite. These companies have seen little grow in the last few decades and have maintained a fairly stable stock price. Download this Download an excel version of this example.