Critically appraise how companies set their dividend policies and explain the factors that a company will consider in setting its dividend policy and in
determining the level of dividend to be paid. Support your arguments by reference to Cable & Wireless Communications http://www.cwc.com/

Please answer the following questions in regard to CWC:

1. Over the long run how much does the company%u2019s level of earning exceed
its investment requirements.

2. Does the firm have enough financial reserves to maintain dividend payouts
when earnings are down or investment requirements ard up to.

3. Does the firm have sufficient financial flexibility to maintain dividends if
unforeseen circumstance wipe out its financial reserves when earnings are down.

4. Can the firm quickly raise equity capital if necessary.

5. If the company chooses to finance dividends by selling equity will change in
the number of shareholders have implication for control of the company.

Your comments should incoporate both thoretical/academic arguments and real world practice. You should research the subject beyond the basic
facts and must provide reference and critical commentary to support the points.