Dividend Policy of DP World - Case Study Example

The paper "Dividend Policy of DP World" is a wonderful example of a case study on finance and accounting. In this paper, I will critically analyze the financial reporting, operating environment, the challenges, and the ways through which, DP World, a publicly quoted company in the Dubai Stock Exchange is navigating through this environment. This will be done through the analysis of its financial statements and reporting.

Historical Background:

Since 2006 the Company has expanded phenomenally. This has been achieved through the expansion and capturing of a wider market share through acquisition, merger, and takeover of kindred companies. This expansionist and winning of new concessions strategy has assisted the business to increase its volumes and have a competitive edge over its competitors.

the Group’s core business in the highly resilient container handling operations which generates approximately 80% of revenues.  The Group generates more than 75% of its throughput in faster-growing markets and 70% of its volumes in higher-margin origin & destination cargo.  DP World has an average concession life of approximately 40 years.

DP World’s strategy outlines its plan on how to maximize its investors’ value through the use of the best infrastructure/ assets to strengthen its core function of supply chain profitably. The company introduced a balanced scorecard framework to communicate its strategy. This was to assist in the clear, consistent, and common communication of the company’s strategy. The framework also delineates in clear terms the Company’s medium and long-term measurable targets. The implementation of the strategy is measured by key performance indicators (KPIs).

These values are the Company’s statement of intent. It shows DP World’s commitment to serving its customers spread right across the globe and the company’s investments in major infrastructure people who assist in the provision of world-class services where and when customers require them.

Financial Statements and Reporting:

• The measurement criteria used by most companies in preparing their financial statements are historical. It is then combined by other measurement bases. Under a financial concept of capital, capital is similar to the net assets of the entity. The choice of a particular concept is usually based on the specific needs of the report’s users. (International Accounting Standards Board,2007)

This is a corporate tax method where some taxes paid by the company is imputed/deemed to have been shouldered by the shareholders through tax credit thus reducing the income tax to be paid. It removes tax challenges of distributing dividends by only making the shareholders to foot the difference between the marginal rate and corporate rate.

Conclusion:

Financial policy management is important in the analysis and tackling of operational and system weaknesses. The management will be able to analyze and evaluate strategic alternatives. Defining the business ideology at the strategic level is part of the business strategy and business development process. For a manager to understand and turn around the fortunes of the company formulation understanding of a good model cannot be gainsaid.

Reliable information about the company is obtainable easily partly due to mandatory disclosure and partly due to the technological advancement of information provision. All this contributes to making the market more efficient and makes decisions guaranteed to make good returns/reduces risks.