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  4. What are Dividends in MikesBikes?
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  4. What are Dividends in MikesBikes?

What are Dividends in MikesBikes?

A dividend is a payment by your company to its shareholders to provide a return on their investment.

The benefit of paying a dividend is that it adds to the longterm value of the shares issued by your company; therefore, increasing your Shareholder Value (SHV). However, you should only pay a dividend once your company is profitable. You must also weigh up the benefit of using these funds for market growth opportunities which may have a greater impact on your SHV.

Paying a Dividend

In MikesBikes the dividend decision is the amount (in cents) paid per share currently issued by your company. For example; a 50c dividend paid by a company which has 1,800,000 issued shares will come at a cost of $900,000.

MikesBikes restricts the maximum size of your dividend payment to 50% of Retained Earnings. You will also not be allowed to issue a dividend if your company’s Share Price is below $5.

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