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Nature of business: Petroleum, cooking gas, construction materials, medical supplies and pharmaceuticals, home appliances, electronics, supermarket products and insurance.

History: ATA (Athireemaafannu Trading Agency) was beginning off STO and became huge success in national development. ATA developed to become the State trading organization (STO) on 9th June 1979. STO took all trading as well as commercial activity on behalf of the Maldivian government. In keeping pace with demands STO started importing more for reasons increasing number of commodity items, modern construction materials, home appliances and consumer goods.

Focus of project: This report includes discussion about STO’s sources of finance whether long or short, dividend policy and profitability.

Company profile:

STO wants to lead through expansion, assortment, analyse advance areas of expertise and joining latest business deal. It also wants to explore internationally and establish themselves as international player which is honoured by international business community.

STO also wants approachability with nationwide existence; it offers peace of mind and assurance to public of uninterrupted provision. It wants to build a skilled workforce by developing human force. STO also want to achieve environmental and sustainable growth with fulfilling their vision.

STO with its group is a successful business leader. It also has keen and focused interest in petroleum, cooking gas and so on. The company is becoming geographically diversified with its operations in Maldives and Singapore as well. This is achieved with direct procurement and distribution over nations hence creating new joint ventures to trade effectively.

STO also focused in exploring in tourism sector. Upcoming projects in areas of hospitality making it a big player and due to which it started earning more foreign currency.

Long term sources of finance

Equity: Equity consists of fund that is contributed by shareholders in a company. It is called s primary market when new shares are issued to investor by the company. Equity is one of the most preferred sources of capital (Baker and Powell 2005, pp 44-70). It shows how much part of capital of STO is shared with shareholder. As STO is developing company and needs contribution by shareholder so STO should issue more equity share in order to increase capital. Equity is comparatively as compared to debt.

Equity of company= ordinary shares= 56,345,500.

Debt: Debt refers to a duty or liability to pay money and provide service. It is the most common form of outside capital for new businesses (Baker and powell 2005, pp 44-70). Debt part of STO is 778,315,651. This means company is preferring loan more in proportion to equity. This shows company does not want to dilute power with other shareholder.

Embedded: In embedded capital structure, a ratio between equity and debt is used to finance company’s capital. This capital structure helps company to build effective portfolio and develop balance between risk associated with company and returns earned by company. In case of STO, the proportion between equity and debt that is more than 60% debt and remaining equity.

Optimum capital structure: It is a financial measurement that is used by companies to determine best mix of debt and equity financing. Optimum structure helps in lowering cost of capital of company. It helps company to be more dependent on equity rather than debt. It seeks the degree of risk that fluctuate the return calculated by company more than its cost of capital (Brinckman Salomo and Gemuenden, 2011). STO is having two types of financing option available with it. Two options are equity and debt, company should opt for other finance options as well in lieu of more capital requirement.

M&M theory: This theory supports capital structure irrelevancy theory, which suggests that valuation of firm is irrelevant to capital structure of company. MM theory defined that market value of firm is decided by its earning power and by the risk of latent assets, and value of firm is autonomous of way it chooses to capitalise its upcoming project (Humphrey Loft and Woods 2009). According to M&M valuation of STO is not dependent on its market value of different finance sources. It totally depends on earning power of STO and valuation is done in autonomous way it decides.  

Agency theory: Agency theory derives the conflict between corporate managers (principal) and outside shareholders (agent). This conflict leads to agency costs (Baker and Gerald 2011). Agency theory supposes that dividend mechanism proves as solution to principal/agent relationship related agency costs. It resolves the issue between managerial and stockholder priorities (Fong & Tosi 2007). In case of STO company and shareholder can be in conflict due to legal or ethical practices adopted by STO. Managers may make decisions that conflict with the best interests of the shareholders. Another problem can be between managers and shareholders related to increase in size of firm which may be beneficial for shareholders but managers may not adopt due to decrease in their ownership in company.
This impairs the goodwill of company so STO should resolve agency problem if it is existing between shareholders and managers.

Solving agency problem with below suggestions:

  • Adopting more legal and ethical practices to retain shareholders
  • Adopting practices best in interest of both parties.
  • Managerial compensation: The firm can pay incentive compensation to combine the goals of executive and shareholders. The company can provide performance share, stock options, salaries and bonuses to award superior performance and penalize poor performance.
  • Direct shareholder intervention: Shareholder can intervene in decision related to corporate issues by using their voting power and electing members in board of director to present their interests.

Pecking theory: The pecking order theory of capital structure is believes that management have inside information (Li, Wei, and Lie 2006). Donaldson study suggests the pecking order of financing specifies that firms can finance their requirement through many options like: raise debt or convertible debt, will issue equity, or will finance through internal sources of income. Free cash flow hypothesis explains that managers have nature to misuse the fund available. For reducing this misuse debt is considered as good option as this checks the indiscretion. In case of STO company has good amount of retained earnings available, so STO should finance its new project with its retained earnings. This helps company to not to dissolve its control over STO. It can adopt different options also like free cash flows, debt option and equity financing.

CAPM theory: The CAPM calculates the return that an investment made by company can earn. It measures required return based on risk measurement. According to CAPM, investors select investments as they are wealth maximizers, based on some return and standard deviation. Investors can lend and can take loan at zero risk rates (Kumar et ol 2008). There are no flotation cost and taxes. All financial assets are fully marketable that means any quantity of asset can be purchased or sold. In STO, CAPM theory can define that shareholder can purchase any amount of shares and can lend any amount of loan to company. According to CAPM, STO all assets are fully marketable and no floatation cost and taxes exists, thus enabling shareholder to trade frequently.

The capital gearing ratio of firm is highly geared this signifies that company is using less stockholder’s equity. The ideal capital gearing ratio is near to 50%. The ratio of STO is more than 50% showing greater risk, so it should take some steps to reduce risk. It’s gearing ratio highlighting the firm inefficiency to pay debt on time. Hence creating issues in taking finance from banks in future.

Short term sources of finance:

Liquidity: Liquidity defines how quickly money through current asset can be converted in cash in hand. It can also be define as emergency savings account which can be accessed at time of unforeseen happening (Hill 2013). In case of STO liquidity is calculated with help of two ratios both are near to ideal hence it can be said that STO is having suffircient liquidity.

Current ratio: It is a financial ratio which shows the proportion between current asset to current liability. It is used as an indicator of companies’ liquidity (Xia et al., 2010). Ideal current ratio is 2:1.The higher the current ratio, higher the capability of a company to pay its obligations. In case of STO the current ratio is less than ideal ratio so STO should take steps to reach ideal ratio. Company is not utilising its current asset properly.

Quick ratio: It is a financial ratio used to check company’s liquidity. This ratio is also named as acid test ratio. This ratio calculates proportion between cash and marketable securities to current liabilities. Ideal ratio is 1:1. In case of STO it is more than 1:1, so it should bring down to ideal to maintain efficiency.

Working capital management



Current ratio

1.35 times

1.38 times

Quick ratio

1.04 times

1.06 times

Cash conversion cycle:  The cash conversion cycle is a measure which defines duration of time in days that is taken by company to convert resource inputs into cash flow (Ebben & Johnson 2011). CCC is calculated with help of inventory turnover, debtors’ turnover and creditor’s turnover. Inventory turnover ratio is 7.53 times in 2016 showing good amount of stock with company and debtors turnover ratio in 2016 is 32 times and creditors turnover ratio is 3.38 times. After converting these ratios in days converting cash conversion cycle in negative showing desirable result, this means STO do not have to pay to stock debtor or material supplier until the final sale is done. STO is utilising its working capital well and thus making readily available cash for other expenses and things. It also says that STO is not paying to is creditors until debtors are pay. Negative cash conversion cycle reduces cost of capital and increases overall profitability.




Cash conversion cycle



Dividend policy:

Definition: It refers to decision of board regarding distribution of residual earnings which should be appropriated to shareholders of company. Companies have no legal obligation to pay dividends to common shareholders (Denis & Osobov 2008). Dividend policies involve mainly decisions regarding: to retain earning for capital investment, to distribute earning in form of dividend, or to retain some and distribute remaining. Dividend policies can be of various types like regular dividend, stable dividend and irregular dividend (Baskin, 1988). Company has progressive policy of dividend distribution after 2014.

The new strategy adopted in 2015 with the expectation of enhancing and guaranteeing the continuance of these exercises while in the meantime to distinguish new potential regions of speculation with the goal that they are concentrating on the expansion and development. These activities made STO to distribute more dividends in 2016.

An analysis of dividend distribution over 5 years is shown in following chart

M&M dividend irrelevance theory: M&M theory defines that shareholders are indifferent to payment of dividends because they can initiate any dividend policy they desire. (Miller, Merton and Kevin, 1985). The theory is in contrast to dividend relevance theory, which assumes dividend policy’s importance in valuation of company.

In case of STO, dividends pay-outs are regular and paid least in 2014, company shares would have sold out more in 2014 as dividend payment was less and people would have bought in 2015. Highest purchase of STO shares in 2016 as highest dividend pay-out by company. M&M theory defines this concept that shareholders are attracted more towards that company which has high dividend pay-out.

Birds in hand concept: Birds in hand is a theory that supposes that investor would prefer dividend over shares to promising capital gain because of unpredictability of later one (Bhattacharya. 2009) . Under bird in hand theory, stocks having higher returns are purchased by investors and that stock establishes a higher market price. According to this theory STO stock will be sold more as the dividend payout in 2016 is highest and encouraging people to purchase STO shares. As according to bird in hand theory, shareholder will prefer more dividend payment rather than high capital gain. This will enhance company shares in market to sell more.

Profitability: Profitability can be defined as primary income source and goal for all companies (Lesakova 2007).It is calculated with revenue and cost incurred by company, income is produced with activities performed by business and expenses are cost of material and labour used in producing that income(Miller Merton and Modigliani. 1961). Expanding revenue is main task of business experts. The profitability of company STO has increased in year 2012 and 2013. It decreased after 2013, so company should take steps to increase again. Profitability ratios of STO are satisfactory and have increased in comparison to previous years. Company can adopt following practices to increase profitability:

  1. Invest in profitable venture to expand the business.
  2. Enhance employee skills so that can contribute more in growth of STO in future.
  3. Reduce unnecessary wastage during to increase productivity.
  4. Reduce cost of transportation and raw material to minimise the production cost. Thus competitive price of products.

Commercial viability: It can be understood as business, product and service which have ability to compete with competitors effectively. STO products are generally commercial viable as they provide daily routine machinery products at competitive price to retain customers.  Moreover it gives discount over products like Hitachi pumps, hammer drills, wall chaser and many more at discount price. It generally has price lower than its competitors to retain customers.

Profitability ratios:

Profitability ratios



ROCE( rate of capital employed)%



Gross profit %



Net profit %



Profit trend analysis of 5 years:

Pest analysis of STO:

Political factor: Maldives is a presidential democracy, with chief executive as leader of government and state. The tax related regulation for company by government can affect its business both positively and negatively. Political stability can also influence company existing business due to imposing of new regulations by new government.

 Economic analysis: Maldivian economy largely based on tourism industry generating more than 28% of their GDP. STO can have impact on its sales if inflation is high and vice versa. The unemployment rate also can hinder company growth as high rate of unemployment will stop people to purchase company products (Jennifer. 2017).. Business cycle faced by companies also affects its business as in boom time it can have high sale and in depression time lower sale affecting growth of business.

Social analysis: Poverty in Maldives is due to regional inequalities in surviving conditions which arise because of remoteness of island and poor infrastructure (Barney 1991). Social analysis of STO, different cultural limitations affects company sales, as company cannot produce every type of product that customer demand. It depends upon STO marketers to shape different customer demand and enable them to purchase STO products.

 Technology analysis: Government spends in research and development programme in those sectors which generates high GDP. If some technology advancement is introduced and demand of STO product is decreased due to new launch, hindering the sale of company product. Sometime due to this company has to sell out-dated product at loss as well, lowering company growth.

Minsky analysis: Minsky analysis began with recognition that post war economy is different, before war depression was continuous event and happening every quarter. It involves different sets of prices. First set for current output like consumption, investment and so on. And another set for asset pricing which includes capital asset used by firms in production. STO also should set different prices for its different products like consumption related product in different price category and investment related products in different price category. This analysis makes company product comparable with other firms. Minsky analysis involves two set of prices, first set includes prices of current output including consumption, products, services and many more. Other set includes prices of capital assets used by STO in production and finance enabling company to attain control over capital. The second set enables STO to determine the position of company to invest in project. These two sets vary independently according to market prices.  Minsky analysis involves 3 types of financing to increase viability:

Hedge finance: Income is expected to fulfill the debt arose during the time

Speculative finance: It suggests STO to cover debt cost as income will be sufficient only to fulfill interest cost of STO.

Ponzi finance: This suggests STO that income is less than expected and is enable to cover interest cost as well. So to cover this firm must sell assets to pay the debt.


STO is company which is trying to establish itself in Maldives which is growing economy. So it is good to invest in company as ratios are performing quiet good. Current ratio is near to ideal ratio of 2:1 and quick ratio is also satisfactory. Due to fluctuations are their over years, shareholders sometimes hesitate to invest in risk taker company so company should try to establish growth in developing economy. Company also should take steps for increasing sales to enhance profitability which has decreased over according to profitability company shareholder will be reluctant to stay over years. Capital gearing ratio is more than 50% making company more risky. Company policy to distribute dividend every year is attracting as company is not keeping earnings to itself. Overall it a growing company trying to excel in upcoming year so before investing a proper analysis should be taken. Company should expand worldwide its business to enhance profitability and goodwill amongst all. It also should reduce its capital expenditure in order to enhance production cost.


In brief it can be say that STO of Maldives is growing company and exporting its services internationally. It has good growth structure and opportunities within economy. The financial analysis of company shows that it is a risk taker that means it prefers debt more over equity. Company dividend policy is growing which defines that company distributes its earning every year to its shareholders and does not accumulate profits as retained earnings. Profitability of company is growing over years hence company can grow to fully fledge with little efforts. All profitability ratios as observed above as increased in comparison to previous years. But recently in previous two year it decreased in comparison to past. Company is trying to explore its activity in tourism sector as well.


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Large Transport Band Gap Room Temperature

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Book review: Send in the clones [electronic resource] : a cultural study of the tribute band / Georgina Gregory

Book review: Send in the clones [electronic resource] : a cultural study of the tribute band / Georgina Gregory.

1) Read your assigned book. Research corresponding music on YouTube or Spotify

2) Write a FINAL REPORT, including a “book review” (NOT BOOK REPORT) assessment of the project, and semester growth:


Identify the THESIS of the book and set this aside in 1-2 sentences at the top of your outline.

In outline form, list each chapter according to the Table of Contents and provide a one paragraph synopsis of each chapter. Try to highlight the THESIS of each chapter and supporting evidence.

In a summary paragraph, write a review of the book. 
Guiding Questions: What did you think of the author’s effectiveness in supporting their THESIS. How did you like the flow of the book? How was the evidence? Was enough evidence presented? Did you connect with the subject matter? How might you apply what you learned in the book to your thinking in the world around you now?


Write a 1-2 paragraph assessment of the project, including your experience in getting to know the material related to the book, your research on YouTube and Spotify, and your partnership experience.


Write 1-2 paragraphs on how your understanding of American popular music has grown this semester. What new music did you learn about? What knowledge did you gain about the music you were already familiar with? What theme from the course was most interesting to you? How did the concert report and book review affect your experience? How has your thinking about the role of music in human experience grown?

Book review: Send in the clones [electronic resource] : a cultural study of the tribute band / Georgina Gregory

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