Capital Structure and Dividend Policy Analysis of FU-WANG Food Limited and Rangpur Dairy and Food Limited

Case Study from the year 2018 in the subject Business economics - Investment and Finance, , course: Corporate Finance, language: English, abstract: This report is prepared with an intention to make capital structure and dividend policy analysis of the assigned two firms which are FU-WANG food limited and Rangpur dairy and food limited who are the participants of food and allied sectors. In an effort to performed capital structure and dividend policy analysis the paper first consider a general overview of the food and allied sector based on some information and analysing the Porter's five competitive factors model. After that this report demonstrates company overview for both the selected firm. The company overview generally contains some basic information of the selected firms and briefly discusses the corporate goals of the firms. Then the capital structure analysis has been conducted based on the stock variable, flow variable and flow concept. Summarizing the result is like that - Under stock concept FU-WANG food has higher financial debt, D/E and financial leverage than those of Rangpur dairy. It indicates FU-WANG food is carrying more debt in its capital than Rangpur dairy. Under flow concept Rangpur dairy has greater cash flow coverage and interest coverage ratio whereas debt service coverage ratio is higher for FI-WANG food. Based on the checklist it has been found that tangibility is higher for Rangpur dairy. But in case of rest of the factors which are profitability (measured in both return on asset and return on operating asset), growth rate, financial slack and uncertainty of operating income is higher for FU-WANG food. This report also performed five factors extended DuPont analysis that reveals FU-WANG food has substantial higher return on equity than that of Rangpur dairy. This result occurs mainly due to the higher interest burden and financial leverage of the firm. In the analysis of dividend policy this report also demonstrates the trends of the earnings per share, dividend pay-out for the last five years. It has revealed that both of the firm is following residual dividend policy. In this policy investment is the major priority. If any amount of residual cash is available to the firm after making investment then the firm will distribute cash dividend. Both of the firms are not paying any cash dividend during the last five years so that it can be understood that the firms have no residual amount of cash is available to them after making investment to distribute cash dividend.

I am Sajjad Hossine Sharif. I have been associated with research since 2013. I completed my Bachelor of Business Administration (BBA) in finance from Independent University, Bangladesh which is one of the most reputed universities in the South Asia. I completed my Bachelor of Business Administration (BBA) in 2016 with the achievement of Vice chancellor honor award, Dean honor award, Dean merit award and Magna Cum Laude. I am currently enrolling Master of Business Administration (MBA) in finance at Dhaka University which is a very prominent university not only in Bangladesh but also in South Asia. I completed 3 diploma degrees to intensify my knowledge in the field of finance and accounting which are- Diploma in Risk Management, Diploma in Accounting - Advanced Controls and Transactions and Diploma in Accounting Core Practice from Alison. I achieved Six Sigma White belt certification form Aveta Business Institute and Six Sigma Yellow belt certification from VMEdu. I have already conducted three researches. My researches are mainly based on economics and finance related topics. In my researches I always try to express the discussion as easily as possible for the new readers. I am recently working on a case study which is based on the life style of the rural people of the northern part of Bangladesh. Moreover, I am also associated with a new research which is significantly related with ICT sector of Europe.