What is the effect of increasing the Return on ordinary shareholders funds?

Question

What is the effect of increasing the Return on ordinary shareholders funds?

Answer 1

Increasing shareholder returns, is the effect, the effect of increasing profits. ergo. share price should go up, and shareholders will be pleased. It is also likely that the tax paid to the revenue will increase.

Increasing the dividend paid to shareholders, although facilitated by increasing profits, may not be put into effect by the company. It may have other uses for the increased funds.

Answer 2

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Answer 3

Happy shareholders.

Answer 4

Increasing the return on shareholders funds means that the profit of the business has improved. Each dollar of shareholders funds has earned a greater  amount of profit than previously. An increased return can lead to an increase in the dividend paid to shareholders. Many companies adopt a policy of paying say 50% of the profit in dividends. Therefore if the company has an increase in profitabality of say 20% on the previous reported period, then it will follow that the dividend per share will also increase by 20% for that period.