Scenario analysis You are leading a role of Chief Financial Officer of a Cement Company in...

Scenario analysis

You are leading a role of Chief Financial Officer of a Cement Company in Oman. Your company has huge current profit of RO 10 million and presently having a plan to capital investment of RO 8 million in the next financial year. The company is willing to continue capital structure of debt 25% and Equity 75% in the future. How much of the RO 10 million should your company pay out as dividends? And what would be the dividend payout ratio of your company?
In case you retain huge amount of profit of your company for long term investment, what financial decision do you take – to pay high cash dividend? Or to issue bonus share (stock dividend)? And explain why?
Presently, your company’s Face Value of Equity Share RO 10 and Market Value of your Share in MSM is RO 25 per share. In order to increase the trading volume and market liquidity of your company stock, will you suggest the management to go for stock split? Explain your management about concept of stock slip with the advantage of splitting the stock of your company with the current scenario.
Given the current scenario COVID 19 and its impact on Cement sector in the near future, what are the factors that you consider affecting the dividend policy of your company? Critically evaluate and justify.

Expert Solution

ekkarill92 answered 2 years ago

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