Matheny AG went public 3 years ago. The board of directors will be meeting shortly after the end of the year to decide on a dividend policy. In the past, growth has been financed primarily through the retention of earnings. A share or a cash dividend has never been declared. Presented below is a brief financial summary of Matheny AG operations (euros in thousands).

Instructions

a. Suggest factors to be considered by the board of directors in establishing a dividend policy.

b. Compute the return on assets, profit margin on sales, earnings per share, price-earnings ratio, and current ratio for each of the 5 years for Matheny AG.

c. Comment on the appropriateness of declaring a cash dividend of €0.20 per share at this time, using the ratios computed in part (b) as a major factor in your analysis.