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    Company: ONGC: Dividend Analysis Study of Dividend Payment Policy & Impact of Dividend Policy On Value of The Firm

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    RICHARD BAGE
    This document provides instructions for an assignment to analyze the impact of dividend policy on firm value for the company ONGC over at least 15 years. Students are asked to examine variables like dividend payout ratio, retention ratio, earnings per share, market share price, and return on capital employed. They need to graph dividend payouts against earnings, evaluate the dividend policy in terms of shareholder wealth maximization, and assess the relationship between dividend policy and share price performance. The assignment is due on June 1st, 2020 and students should attach supporting data and annexures.

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    Company: ONGC: Dividend Analysis Study of Dividend Payment Policy & Impact of Dividend Policy On Value of The Firm

    Uploaded by

    RICHARD BAGE
    46 views3 pages
    This document provides instructions for an assignment to analyze the impact of dividend policy on firm value for the company ONGC over at least 15 years. Students are asked to examine variables like dividend payout ratio, retention ratio, earnings per share, market share price, and return on capital employed. They need to graph dividend payouts against earnings, evaluate the dividend policy in terms of shareholder wealth maximization, and assess the relationship between dividend policy and share price performance. The assignment is due on June 1st, 2020 and students should attach supporting data and annexures.

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    Dividend Assignment

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    This document provides instructions for an assignment to analyze the impact of dividend policy on firm value for the company ONGC over at least 15 years. Students are asked to examine variables like dividend payout ratio, retention ratio, earnings per share, market share price, and return on capital employed. They need to graph dividend payouts against earnings, evaluate the dividend policy in terms of shareholder wealth maximization, and assess the relationship between dividend policy and share price performance. The assignment is due on June 1st, 2020 and students should attach supporting data and annexures.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    46 views3 pages

    Company: ONGC: Dividend Analysis Study of Dividend Payment Policy & Impact of Dividend Policy On Value of The Firm

    Uploaded by

    RICHARD BAGE
    This document provides instructions for an assignment to analyze the impact of dividend policy on firm value for the company ONGC over at least 15 years. Students are asked to examine variables like dividend payout ratio, retention ratio, earnings per share, market share price, and return on capital employed. They need to graph dividend payouts against earnings, evaluate the dividend policy in terms of shareholder wealth maximization, and assess the relationship between dividend policy and share price performance. The assignment is due on June 1st, 2020 and students should attach supporting data and annexures.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Dividend Analysis

    Study of Dividend Payment Policy & Impact of Dividend Policy on Value of the firm

    Instructions: This assignment requires you to elaborate the dividend policy of the given firm and to find
    out the impact of dividend payout policy on value of the firm. Use Dividend paid, dividend payout ratio
    and Retention Ratio as independent variable and Market Price of Share, EPS & Value of the firm
    (Enterprise Value) and Return on Capital Employed as dependent variable for finding out the impact of
    dividend policy on value of the firm (data of at least 15 years).

    Many of the variables required will come from the firm's financial statements. However, you may also
    need to use additional data sources such as Moneycontrol.com's data page, and other web sites. The
    assignment is due on 1st June 2020. Complete the page below and attach all supporting annexures

    Name of the Student: Arihant Jain

    ERP ID- 0191PGM006

    Company : ONGC

    1. Draw a graph using EPS and DPS to show which dividend distribution policy your Company is
    following. Explain the graph to support your answer.

    Answer:- As per the Data & Graph the company is following the constant dividend policy ,
    kharround 7% - 9% earnings of the company in 2019 -2010 and before 2010 the dividend is depend on
    the EPS arround 31% - 33% earnings of the company.

    2. Analyze the dividend policy of your company for shareholders’ wealth maximization and advice
    on an optimal dividend policy to ensure shareholders’ wealth is maximized.

    Answer :- the company should used to small constant dividend per share plus extra dividend policy
    for shareholders wealth maximization because in this policy the some part of dividend is constant fix on
    MPS and the some part of dividend is depend on the MPS if the MPS of company is high so the dividend
    which is depend on MPS is high.

    3. Study the impact of Company’s dividend policy on its share price performance and discuss the
    relevance of dividend theory for Company.
    Answer:- There is a inadequate correlation and non significance F value between dividend per share
    and stock price for ONCG .the dividend payments policy doesn't depend on the share stock market
    performance. i.e. in 2019 te dividend per share is 7 rupees but the MPS in 159.55 rupees And in the
    2018 the dividend per share is 6.6 rupees but the MPS is 178.65 rupees .the company paid is lower
    dividend per share but the market price of per share is respond positively.

    The correlation between MPS & DPR and also Enterprise value. It can be concluded the MP/EV have a
    negative correlation i.e. in 2019 the MPS & EV is negative but the DP is positive & in the 2018 the MP /
    EV is positive but the DP is negative so the significant relationship between DPR and MPS and DPR with
    Enterprise Value. ONGC support the relevancy theory of dividend policy.

    4. Evaluate the retention policy of Company for investments and its return on capital employed,
    and determine their impact on Company’s shareholders’ investment behavior.

    Answer:- Retention and dividend payout decisions mainly depend upon the enterprise and they are
    determined by its future investment strategy and its evaluation of return on capital employed (ROCE).
    ROCE evaluation is often linked to the assessment of shareholders’ value in terms of return on equity
    (ROE). ROCE, calculated by dividing earnings before interest and taxes by total capital employed, is the
    primary measure of how efficiently a company utilizes its available capital to generate greater profits.
    Ultimately, it affects ROE, as ROE is about the profits generated on shareholders’ equity.. During
    2016,2017 and 2018 company may be able to meet the objective of maximizing shareholders’ value,
    indicating better returns on the capital employed and better returns in terms of higher share price. As
    for shareholders, ONGC relatively lower dividend payout compared to other companies indicates its
    priority for growth. The shareholders will have to continue to bank on the hope that the company's
    share price will offer it's own reward.

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