Global Journal of Commerce & Management Perspective
Open Access

Abstract

Impact of Debt-Equity and Dividend Payout Ratio on the Value of the Firm

Mr.K.MANJUNATHA

Among the various financial ratios Debt-equity and Dividend payout ratios are the key financial ratios and their impact on the value of the firm is either significant or insignificant, which is going to describe in the study. Wealth maximization is the ultimate object of any firm and fulfilling the object the firm has to be depend on right decision on different finance relating aspects like Debt-equity (capital structure) and Dividend payout (Dividend decision) since both are important for the values of the firms as debt-equity helps to maximize the earnings and dividend payout helps both investors and growth of the firm by using different payout ratios. Aim of the study was to understand the Impact of Debt-equity and Dividend payout ratios on the value of the firm. Here the variables such as debt-equity, dividend payout , retention ratios and the return on equity share prices of the Indian public limited companies are studied to understand the relationship between the debt-equity & dividend payout ratios and the share prices. The objectives of the study were to describe the dividend distribution and debt-equity pattern and to find out the relationship between the debt and dividend & the return on the equity shares. The findings of the study can be used to understand the influence of capital structure and dividend decisions on the value of the firm. A descriptive research was conducted. Convenient sample of 29 companies are selected and shares of which are traded in Bombay Stock Exchange and National Stock Exchange was studied. The relationship between the Value of the firm & capital structure and Dividend Policies of the firm is studied using Multiple Regression model.