Corporate Financel

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Corporate Financel

  1. 1. Dividend Policy<br />Comparison<br />
  2. 2. Objective<br />To know the cause and effect association between dividend decision and its determinants in Indian IT industry and cement industry. And also do a comparative analysis between the two.<br />
  3. 3. Determinants of Dividend Policy<br />
  4. 4. Profit After Tax<br />
  5. 5. Lagged Dividend<br />
  6. 6. Current Ratio<br />
  7. 7. Debt Equity Ratio<br />
  8. 8. Interest Payment<br />
  9. 9. Sales<br />
  10. 10. Market Capitalization<br />
  11. 11. Earning Per Share<br />
  12. 12. Payout Ratio<br />
  13. 13. Capital Expenditure<br />
  14. 14. Methodology<br /><ul><li>Descriptive statistical analysisis used to analyze trend of dividend payout for both the industries over the horizon of study.
  15. 15. Correlation of various factors influencing dividend policy is done to identify degree of influence of different factors</li></li></ul><li>Data Collection<br /><ul><li>Secondary data has been collected from ‘capitaline database’.
  16. 16. Data was collected for a sample of 20 companies for both the sectors (IT industry and cement industry).
  17. 17. The sample includes the companies which have paid dividends over a major portion of the horizon of study.
  18. 18. The period of study includes data from a period of 1995 to 2009</li></li></ul><li>
  19. 19. DESCRIPTIVE ANALYSISFOR IT INDUSTRY<br />
  20. 20. FOR CEMENT INDUSTRY<br />
  21. 21. COMPARATIVE ANALYSIS<br />The first major observation that can be made for both the industries is the fairly constant payout ratio over a long period. Also the dividends paid in the IT industry have been fairly high as compared to that in cement industry owing to higher and more certain earnings.<br />
  22. 22. CORRELATION FOR IT INDUSTRY<br />
  23. 23. CORRELATION FOR CEMENT INDUSTRY<br />
  24. 24. COMPARATIVE ANALYSIS<br /><ul><li>In both industries factors impacting the dividend policy are almost same but the degree of influence is quite different.
  25. 25. Sales and PAT are the most significant factors imparting dividend paying capacity to the firms.
  26. 26. Since in the cement industry average Debt-equity ratio is higher, it has higher negative impact on dividend policy.
  27. 27. Also the earnings of IT companies have larger portion in the form of cash inflows and thus have enough capacity to pay dividends out of earnings (PAT) with lesser effect of current ratio.</li></li></ul><li>CONCLUSION<br /><ul><li>Since 1995 ,despite of all the uncertainties in environment and earnings both the industries have maintained fairly constant payout ratio.
  28. 28. But IT industry owing to higher earnings have distributed larger amount in the form of dividends while the cement industry has been more conservative in the approach.
  29. 29. The factors impacting the dividend policy of the companies in both the sectors have been fairly same in the long term though the degree of influence has been different.
  30. 30. Both the industries follow almost same approach in paying out dividends with few factors like PAT and Debt-Equity ratio explaining majority of decisions regarding dividend policy. </li></li></ul><li>GROUP -7<br />Anmol Sahni – 91009<br />Ashutosh Kumar Jha- 91011<br />Chinmay Jagga – 91013<br />Deepinder Singh – 91016<br />Divanshu Kapoor - 91017<br />Neha Arya – 91036<br />

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