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The dividend decision




               3.2 Dividend capacity

               The factors listed above limit the ‘dividend capacity’ of the company.

               Legally, dividend capacity is determined by the amount of accumulated distributable
               profits.

                             However, more practically, it can be calculated as the company’s Free
                             Cash Flow to Equity (FCFE – covered in more detail in the later Chapter
                             13: Business valuation).




















































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