What is Gordon’s Model of Dividend Policy? (Formula, Example, Calculation, and More)

Gordon Growth model is based on the concept of dividend growth in the future. If the company does not make some significant breakthrough/unexpected growth or faces some extreme misfortune, then the growth depends on doing more for the same work. For instance, if the company has four retail outlets, it needs to expand from 4 …

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What Is A Portfolio Immunization Strategy? (Definition, Understanding, And How Does it Work?)

Definition: Portfolio Immunization is a strategy that is used to manage your portfolio with a financial goal. This goal can be determined with your investment to a specific amount or at a certain point. Further, this strategy is used to fund a future liability. Immunization is one of two kinds of dedicated portfolio strategies. Understanding …

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What Are the Factors Affecting Dividend Policy of the Company? (Explained)

The announcement of dividends is one of the board of directors’ essential decisions to execute strategic and operational aspects of the Company. So, it’s important to manage the expectations of the shareholders and the Company’s needs for the financing. It’s not always the case that shareholders want higher dividends as their priority may be capital …

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What Are the Five Source Accounting Documents? (All You Need To Know)

Introduction It comes from the source, meaning the source of the document. The source accounting documents or simply source documents are financial document which provide financial details about a company. Consider this, whenever there is a financial purchase or a slip from the supplier, it creates a financial trial, and this financial trial is referred …

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What is a Budgeted Balance Sheet and How to Prepare It?

Introduction Budgeted balance sheet is just like a balance sheet, i.e., it contains all the assets, liabilities, payables, capital depreciation, amortization etc, exactly like a balance sheet, but there is one big difference and that is that the budgeted balance sheet unlike the balance sheet presents the future balance sheet, whereas balance sheet shows the …

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What is the Rule 407 letter? – Definition, Explanation, Example, and More

Definition Rule 407 was a law that required a letter which requires an employee working in Financial Industry regulatory authority or FINRA, which allowed the employee to hold investments in equities or bonds in personal accounts. The employees must disclose personal bank account information about the account in which they are holding the security. It …

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What is Activity-Based Costing and How Does It Work (Explained)

What is Activity-Based Costing? Activity-based costing is a process for computing production costs. It distributes overhead costs into different production-related activities. ABC is a procedure that applies overhead allocation to the products that utilize those activities, allowing it to be more exact than traditional allocation. ABC works effectively in complex processes where there isn’t a single …

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Income Statement Under Absorption Costing? (All You Need to Know)

What Is Absorption Costing? Absorption costing is a tool used in management accounting to capture entire expenses connected to manufacturing a certain product. For external reporting, generally recognized accounting principles (GAAP) demand absorption costing. Moreover, it is a costing process for valuing inventory. It’s also known as complete costing because it accounts for all direct …

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How Soon After Ex-Dividend Date Can I Sell? All You Need to Know

Overview When you own dividend stocks, it’s important to understand the dividend dates. Dividend announcements and changes can impact stock prices as well. Many investors look to make quick profits with changes in stock prices around the ex-dividend date through dividend capture. Investors of mutual funds and ETFs receive periodic payments as well. Hence, a …

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