Dividend Essays

Electronic Case (corporate Finance)

1. Tom believes the company should use the extra cash to pay a special one-time dividend. How will this proposal affect the stock price? How will it affect the value of the company? Electronic Timing, Inc. (ETI) needs to be careful on how it dispenses the extra cash as a dividend. Issuing the extra cash as a dividend would mean that the shareholders collectively will probably drop by the same amount because of the transfer of wealth from the company…

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Dividend Policy

1) Miller and Modigliani, the middle-of-the-roaders, opined that dividend policy has no effect on a firm’s value in a perfect and efficient capital market. The rightist believed that dividend payout increases the value of a firm; the leftist said that if taxes on dividend are higher than capital gains then companies should pay the lowest dividend policy and concentrate on capital appreciation; also that companies should use instead those monies to invest for growth and development that appreciate capital. Evidence…

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Emi Corporate Finance

In this Internet age, the consumer is using music content more than ever before— whether that’s playlisting, podcasting, personalizing, sharing, downloading or just simply enjoying it. The digital revolution has caused a complete change to the culture, operations, and attitude of music companies everywhere. It hasn’t been easy, and we must certainly continue to fight piracy in all its forms. But there can be no doubt that with even greater commitment to innovation and a true focus on the consumer,…

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Dividend Growth Model

1. Dividend Growth ModelThe basic assumption in the Dividend Growth Model is that the dividend is expected to grow at a constant rate. That this growth rate will not change for the duration of the evaluated period. As a result, this may skew the resultant for companies that are experiencing rapid growth. The Dividend Growth Model is better suited for those stable companies that fit the model. Those that are growing quickly or that don’t pay dividends do not fit…

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Dividend Policy at Fpl

In 1994, Merrill Lynch published a report that disclosed the change in their investment rating for the FPL Group, Inc.. They had downgraded this rating as they expected the directors would choose not to raise the annual dividend. This also happened to be the first time in 47 years that the FPL Group had not raised dividends. This tweaked the interest of a certain electric utilities analyst at the First Equity Securities Corporation, Kate Stark. She now was faced with…

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Reeby Sports

What is the company worth per share? We will value the company using George’s forecasts. The spreadsheet accompanying this solution (sheet 4) sets out a forecast in the same general format as Table 4.4. Historical results from 1999 to 2004 are also shown. Earnings per share (EPS) equals return on equity (ROE) times starting book value per share (BVPS). EPS is divided between dividends and retained earnings, depending on the dividend payout ratio. BVPS grows as retained earnings are reinvested….

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Analysis and Evaluation_ Financial Performance of Cathay Pacific 2012

The creditors and investors are care more about the financial leverage ratios because it reveals the extent of company management which is willing to fund its operations with debt, rather than equity. A high debt/equity ratio generally means that Cathay Pacific has been aggressive in financing its growth with debt. This can result in volatile earnings of the additional interest expense. If a lot of debt is used to finance increased operations (high debt to equity), Cathay Pacific could potentially…

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Distribution Policy

A. 1) What is meant by the term “distribution policy”? How have dividend payout versus stock repurchase changed over time? Distribution Policy involves three issues. 1) What fraction of earnings should be distributed? 2) Should the distribution be in the form of cash dividends or stock repurchases? 2) Should the firms maintain a steady, stable divided growth rate? The dividend payout versus stock repurchase has changed dramatically during the past 30 years. First off the total cash distributions as a…

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Hampton Machine Tool Company

About The Company Hampton Machine Tool was established in 1915 and has been manufacturing machine tools since its foundation. Hampton company’s customer base is made up primarily of aircraft manufacturers and automobile manufactures in the St. Louis area. It experienced record production and profitability during the years. Sales and profitability declined in the mid-1970s with the withdrawal from Vietnam War and the oil embargo. However, the company had stabilized the massive of sales by the late 1970s. The reasons of…

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American Home Products Corporation

American Home Product Corporation (AHP), a highly growing American company, has four business lines: prescription drugs, packaged drugs, food products, house wares and household products. Its policies include: -A tight financial control and maintained an aggressive capital structure policy. – Make money for its stockholders and to maximize profits by minimizing cost. – It has been able to finance internally its growth while paying a very high portion of its earning to its shareholders (60%). Currently, AHP seems to have…

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Ipo of Hertz

1. Why are the private equity sponsors pursuing an IPO of Hertz at this time – that is, what is the purpose of the IPO? The sponsors wanted cash in order fund another special dividend. They felt that even though they had only owned the company for short time, they were in the perfect position to sell it. There are several reasons why 2006 was an opportune time for the IPO of Hertz. The market was on the rise with…

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Case Review_ Linear Technology

Linear Technology was based out of Silicon Valley and founded in 1981. The company specialized in design, manufacture and marketing of analog integrated circuits. Linear enjoyed a diversified customer base, with 33% of its business coming from the communications sector, 27% from computers, 6% from automotive, and 34% from various other applications. With their focus on the analog segment of the IC sector, which was characterized by custom designed products, it was imperative that Linear hires and retains talented people…

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Dividend Policy of Telus

“Having a clear dividend growth model targeting two dividend increases per year to 2013 of circa 10% annually subject to the TELUS Board’s assessment and determination” (Telus) Telus’s current dividend policy is to continue with its forward-looking dividend growth plan until at least the year of 2013. The plan is aimed to achieve two dividend increases per year with an annual growth rate of 10%. Of the two companies, Telus has a higher-than-industry dividend payout ratio. As compared to a…

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Financial Management Case Study Payout_ Gainesboro

Corporate Goals Management expected the firm to grow at an average annual compound rate of 15% and reach $2.0 billion in sales and $160 million in net income through 2011. Recent strategy of Gainesboro The company devoted a greater share of its research-and-development budget to CAD/CAM as to reestablish its leadership in the field. The company also underwent two massive restructurings, including selling two unprofitable lines of business, selling two plants, eliminating five leased facilities, and reducing personnel in 2002. Then,…

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Cashflow Statements – Three Examples

Accounts Payable increased in both first years, especially in 1990. For 1991 the amount decreased. III) Assessment of the financial strength: Own assessment of the financial strength of the company, why? The Gamma Corporation realizes a process of restructure and acquisition. A lot of purchases of plant, property, and equipment and high values in depreciation and amortization describe the firm’s situation best whilst it is also well managed from a financial perspective. Even though the reported net income of especially the…

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