Distribution of net profit with special emphasis on investment on traditional financial instruments

Abstract

This paper deals with the analysis of net profit distribution, taking into account investments in traditional financial instruments. Distribution of net profit is determined by dividend policy, since dividend policy reflects different interests in a company. Bearing in mind the importance of dividend policy in attracting capital, companies should inform their shareholders and other interest groups about their dividend policy. Also, the whole process would need to be harmonized with the strategic goals of a company. The paper is composed of three parts. In the first part, the paper deals with the analysis of impact of profits and losses on company's results and earnings per share (EPS), depending on the classification of shares (trading securities, TA; available for sale, AFS). The second part of the paper presents the impact of different interest groups (shareholders, employees and managers) in defining the minimal and maximal amount of dividends. The third part of the paper is reserved for research results.

Keywords

• distribution of dividend
• dividend policy
• minimal and maximal dividend