Vol. 2, Issue 2, Part B (2016)

Abstract
The capital structurerndesign is a crucial job as it involves a complex tradeoff among severalrnconsiderations like income, risk, flexibility, control, timing of issue and sornon. The dividend policy of a firm determines the proportion of earnings paid tornshareholders by way of dividends and the proportion of income ploughed back inrnthe firm for reinvestment purposes. If a firm’s capital structure decisionrnmaking is ndependent of its dividend payout policy, then a higher dividendrnpayment will entail a greater dependence on external financing. Thus, therndividend policy has a bearing on the choice of financing. The capital structurernand dividend payout policy always differ across companies, industries andrnsectors worldwide. The current study evaluates the impact of capital structurernon dividend decisions of select cement companies in India. It was concludedrnthat profitability and risk had significant influence on the capital structurernand profitability had influenced the dividend decisions of the Indian cementrncompanies. It was also revealed that there exists a mild correlation between dividendrnyield ratio and Long term debt to equity ratio and Long term debt to assetrnratio.