Assuming you were newly appointed as the Chief Finance Officer (CFO) of a listed company, in which majority of shares are held by Mr Peter Chan (a reputable businessman in HK for 30 years) and his family; and 6 out 7 of directors are from Chan’s family, you are drafting the financial statements for the year. What would you expect them about the earning pattern and dividend policy they like most? It is also observed that the remunerations of directors are moderate.
(Hint: firstly discussion should include the earning pattern with reason(s), then dividend policy)
If I am drafting the Financial statement of the company, I would be liking to ascertain the personal expenditure of these directors because when there is a high level of control of these promoters from one family then there may be excessive amount of payment of expenditure to these directors and it can be seen that these personal expenditures are not chargeable to the business expenditure and hence I would be looking for treatment of personal expenditure in the proper accounting manager.
I will also be looking for the proper treatment of the dividend because there is a large amount of shareholding from one family ,it will be seen that the company will be trying to to distribute a large chunk of dividend from the profits in order to to increase their overall realised profits from the business so I would be trying to look for the dividend payout ratio out of the profits.
I would preferring that they are treating the expenditures in the proper way and they are also trying to reinvest their profits back into business because they are a profit making business rather than paying out their profits as Dividend.
Assuming you were newly appointed as the Chief Finance Officer (CFO) of a listed company, in...
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