Impact of Liquidity, Turnover and Profitability on Dividend Payment of Select Steel Companies in India

Abstract

The Indian Iron and Steel industry contributes significantly to the overall growth and development of the economy. As per the estimation of the ministry of steel, the industry today directly contributes to 2% of India's GDP. Payment of dividend is desirable because the shareholders contribute in the capital of the company to earn higher returns from their investment and to maximize their wealth. In this, retained earnings are the major sources of internal finance for financing future requirement such as expansion and modernisation of the company. Hence, both business growth and dividends are desirable. On the contrary, higher dividend leads to less provision of funds for growth and higher retained earnings leads to low dividends which majority of shareholders dissatisfies from return on investment, from the analysis it found that many factors that influence the determinants of dividend namely Return on Assets, Return on net worth, Debtors Turnover Ratio and Gross Profit Margin and Net profit margin between large cap companies and midcap companies.