Dividend policy is part of both ACCA FM & AFM. However, it is examined in different ways in each paper.

In ACCA FM, the questions concentrate on written side . The knowledge required can be allocated into:

1. Dividend Policy Theories – MM, Residual & Pattern are the main ones.

2. Practical Aspects – Legal, Tax & Cash Availability are three of these.

You also need to know about the two alternatives to a traditional dividend policy – Scrip Dividends & Share Buy Backs.

However, ACCA AFM candidates are required to know the calculations.

Dividend capacity value is regularly tested as this requires students to prepare the FCFE. You will be expected to deal with transfer pricing and bilateral tax arrangements.

The alternative question is to use ratio analysis to assess several companies dividend policies. Then go on to conclude on their differing approaches.