“Comparative Analysis of Dividend Policy & Capital Structure” Prepared For: Lutfur Rahman Senior Lecturer, Department of Business Administration, East West University. Course Code: FIN-435 Course Title: Managerial Finance
Prepared By: Md. Habibur Rahman Utpal Kumar Ghosh ID: 2006-2-10-175 ID: 2006-2-10-179
Date of Submission: August 11, 2009
East West University
43, Mohakhali C/A, Dhaka-1212
Origin of the Report: Mr. Lutfur Rahman, Senior Lecturer, East West University, has assigned this report to us, as this report is a requirement of the course “Managerial Finance”. Objectives of the Report: The broad objective of the report is to build a strong familiarity about the Dividend policy & Capital Structure to measure the performance of the company. By preparing this report we are trying to acquaintance of the overall dividend policy & capital Structuring. Moreover the superficial objective of the report is to acquire knowledge about the insights of interpreting the ratios. Preparing this report such kind of topic is extremely beneficial for us as the students of finance. Scope of the Report: This report is based on the dividend policy & capital Structuring. Through this report we are try to focus on the area related to the financial performance of the companies. We particularly focus on dividend policy & capital Structuring and related ratios; as those are the major indicator of the performance assessment of a firm. Methodology: For execution of the report we use MS office software. Topic of the report is not permitting us to input data from primary sources. As the report must be factual, the data source of this report is basically secondary sources. We gathered our relevant data from the different periodicals published by the two cement companies. We also collect our relevant information from different books as well. We also collected some data from the internet to broaden our scope of analysis. Dhaka Stock Exchange websites, Meghna Cements mills website, Confidence Cement Ltd, websites are few of them. Limitations: • Inadequate knowledge in studying reports. • Lack of in-depth understanding of certain terms and concepts prevented us from going into details. • Lacks of research. • Unavailability of updated data. • Time limitation is also been there. • Lack of information and coordination. • Confidentiality of data was another imperative barrier that was faced during the conduct of this study. • Power Crisis.
Dividend: Dividends are payments made by a corporation to its shareholders. It is the portion of corporate profits paid out to stockholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend. Many corporations retain a portion of their earnings and pay the remainder as a dividend. For a joint stock company, a dividend is allocated fast as a fixed amount per share. Therefore, a shareholder receives a dividend in proportion to their shareholding. For the joint stock company, paying dividends is not an expense; rather, it is the division of an asset among shareholders. Public companies usually pay dividends on a fixed schedule, but may declare a dividend at any time, sometimes called a special dividend to distinguish it from a regular one. Cooperatives, on the other hand, allocate dividends according to members' activity, so their dividends are often considered to be a pre-tax expense. Dividends are usually settled on a cash basis, as a payment from the company to the shareholder. They can take other forms, such as store credits (common among retail consumers' cooperatives) and shares in the company (either newly-created shares or existing shares bought in the market.) Further, many public companies offer dividend reinvestment plans, which automatically use the cash dividend to...
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