The Dividend Policy and Its Impact on the Financial Sustainability of Enterprise

Abstract

The article analyzes and evaluates the impact of the dividend policy on the financial sustainability of enterprise on the example of individual mining enterprises of the Kryvyy Rih iron ore basin. On analyzing the specialized publications, the authors define the features of interpretation of the definition of «financial sustainability of enterprise» and determine that the knowledge increment in understanding the essence of the concept in recent years is due to consideration of several applied aspects and changing economic conditions. It is substantiated that the financial sustainability of enterprise is influenced by external and internal factors, among which the enterprise’s policy on profit distribution and dividend payments holds an important place. On the basis of the analysis results is determined that there is a direct relation between the volume of undistributed profits, the obligations to the participants to pay dividends and the level of the financial sustainability indicators, in particular the structure of the sources of financing. It is proved that in recent years the management of the researched enterprises has pursued a very aggressive dividend policy, which leads to a significant deterioration in the financial sustainability of Kryvbas mining enterprises in the context of the projected economic crisis.

Keywords

• financial sustainability of enterprise
• dividend policy
• aggressive strategy of dividend payments
• structure of sources of financing