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Dividend Policy at Fuyao Glass Paper

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Economics

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BUS611BUS611: Project Planning and Management (MFX1729A)

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Running Head: DIVIDEND POLICY AT FUYAO GLASS 1

Dividend Policy at Fuyao Glass

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DIVIDEND POLICY AT FUYAO GLASS 2

Introduction

The dividend policy of a company determines the proportion of earnings it would

issue to its shareholders along with type of the dividends and the frequency at which the

dividends are issued. The dividend policy is formulated as per the strategic vision, objective,

and intention of the company. The dividend policy must get approval from majority of

members of board and is made available on the company website for investors to access

easily (Jacob & Michaely, 2017).

“To what extent is Fuyao a value creator or a value destroyer, and what are the

potential sources of that creation (or destruction)?”

Fuyao made a firm foot in China and became the best manufacture of auto-glass in the

world. It offered high-quality products and services by building more satellite facilities near

its customers so that products and services could be provided in a cost-effective and timely

manner. Value creation is usually based on the creativity of mass customization and coming

up with an improved product or service to the market with the aim of satisfying customer

needs at the lowest cost possible.

“The company’s financial statement indicates the company as a value creator with a

dramatic increase in net income from ¥392 million in 2005 to ¥2,217 million in 2014. Exhibit

4 indicates an increase in ROA and ROE from 5.98% to 13.12% and 17.73% to 25.14%,

respectively, representing strong financial growth. The most important thing for the

shareholders is that the firm earns higher profits and returns on their investments as

dividends. The dividend pay-out ratio is consistent with 50% from 2006 to 2013, which is

always favorable for shareholders and other investors.

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Running Head: DIVIDEND POLICY AT FUYAO GLASS Dividend Policy at Fuyao Glass Student’s Name Course Title Date 1 DIVIDEND POLICY AT FUYAO GLASS 2 Introduction The dividend policy of a company determines the proportion of earnings it would issue to its shareholders along with type of the dividends and the frequency at which the dividends are issued. The dividend policy is formulated as per the strategic vision, objective, and intention of the company. The dividend policy must get approval from majority of members of board and is made available on the company website for investors to access easily (Jacob & Michaely, 2017). “To what extent is Fuyao a value creator or a value destroyer, and what are the potential sources of that creation (or destruction)?” Fuyao made a firm foot in China and became the best manufacture of auto-glass in the world. It offered high-quality products and services by building more satellite facilities near its customers so that products and services could be provided in a cost-effective and timely manner. Value creation is usually based on the creativity of mass customization and coming up with an improved product or service to the market with the aim of satisfying customer needs at the lowest cost possible. “The company’s financial statement indicates the company as a value creator with a dramatic increase in net income from ¥392 million in 2005 to ¥2,217 million in 2014. Exhibit 4 indicates an increase in ROA and ROE from 5.98% to 13. ...
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Tags: dividend policy strategic vision financial statement Financial growth streamlining production processes