RELATIONSHIP BETWEEN LIQUIDITY, PROFITABILITY, FINANCIAL LEVERAGE AND DIVIDEND POLICY: WITH SPECIAL REFERENCE TO AUTOMOBILE SECTOR IN INDIA

This research is going to investigate the relationship between financial ratios and dividend policy of the automotive companies in India during the period 2010 to 2021. The Correlation, Regression, and Granger Causality Test has been used to identified the relationship between the dividend policy, liquidity, profitability and financial leverage of the Automotive Sector in India. The result of the empirical analysis showed that company like Maruti Suzuki has a high and stable dividend policy among all other automotive companies the current ratio and debt equity ratio are significantly negatively correlated with dividend pay-out ratio. M&M shown a positive and significant relationship between dividend pay-out ratio, return on assets and return on equity. This indicated that these companies pay more dividend in case of more earnings. The result of the study has drawn a conclusion that dividend policy is a discrete decision of the management of the company. Few companies are considering factors like liquidity, leverage, return on assets and return on equity while deciding the dividend policy and some companies are considering stable dividend policy irrespective of the other mentioned factors