THE MEANING OF NET INCOME AND OPERATING CASH FLOW IN DETERMINING THE DIVIDEND POLICY

Abstract

Background: The purpose of investors in investing is to obtain income or return, one of which is a dividend. However, the level of dividend income earned by investors varies depending on the company's policy on dividend payout to its investors. Aim: The purpose of this study is to know the meaning of net income and operating cash flow in determining dividend policy on manufacturing companiesin the consumer goods industry sector listed in Indonesia Stock Exchange on the period 2014-2016. Methods: Samples are chosen by using purposive sampling technique. The data collected, then analyzed by using multiple linear regression method. Results: The result of analysis shows that at 0.05 significance level, it is proven that operating cash flow has a significant effect on dividend policy, while net income does not affect dividend policy. Conclusion: These results indicate that operating cash flow tends to provide meaning in determining dividend policy, so that accountants as the presenter of financial information should focus the presentation of this information as an effort to attract investors to invest in the company's shares, as well as to focus the other important information presented.