One of the major financial decisions that both managers and boards of directors face routinely affecting the relationship with their investors relates to setting out the companys dividend policy. It formulates the set of guidelines or rules on how the companys profit is distributed to its shareholders relative to the net income it receives. The term payout policy refers to the decisions that firms make about whether to distribute cash to shareholders and how much cash to distribute. Although these decisions might seem less important than the investment decisions and the financing choices of the firms, they are important decisions that boards of directors and managers face routinely. Investors monitor firms payout policies carefully, and unexpected changes in those policies can have significant effects on firms equities

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Assume that you are the CFO of the Healthy Feedmill contemplating the dividend payout policy. In view of the present and future prospect of the company what is the most relevant payout policy (dividend payout policy)? Name and describe factors that affecting payout policy! You should provide specific points and arguments that support your views on the issue. You are free to create some assumptions to support your argument and analysis. Provide appropriate citations of the theoretical references and concepts to support your answers.