Critique for Fpl Group Inc's Case
BEA343
Corporate Finance
Generally, the report team have a well-presented PowerPoint presentation about their analysis of dividend policy at FPL group Inc. They have demonstrated the process of how they come up with these results briefly. They have also examined the company’s history, financial figures and some related industry information, and gave reasonable recommendations. The report team expected that the company would most likely to hold their currently dividend policy and suggested their clients to sell the company shares in short term.
However, we strongly suggest that the report team should include more relevant financial calculations to backup their point of views; in addition, the application of theory was not aliment with their arguments.
After our group had studied and researched about the same case, our opinion is very different from the report team. The detailed analysis will be explained in the following paragraphs.
Through our analysis, we believe that the dividend cut would be more likely to happen in the near future for the company. Thus, we suggest that our clients could sell their shares for the short term; and for medium to long term investing strategies, our clients could buy back shares when the price start to go up. For the following paragraphs, we will, firstly, analysis the company’s financial situations, follow by the theoretical evidences, and finally, conclusion.
If company has reduced their dividend payout, they will have a sum of $150 million per year; we believed the company could definitely get a better use of their retained earnings to improve their financial situation. For example, the company could reinvest in a new project to create future profits (cash inflows) or repay the interest debts to reduce the risk of company.
Generally, according to FPL’s bad circumstances, we were not expect firm’s earning will grows faster than dividend payout ratio, so we predicted FPL group will cut its dividend payout ratio
Corporate Finance
Generally, the report team have a well-presented PowerPoint presentation about their analysis of dividend policy at FPL group Inc. They have demonstrated the process of how they come up with these results briefly. They have also examined the company’s history, financial figures and some related industry information, and gave reasonable recommendations. The report team expected that the company would most likely to hold their currently dividend policy and suggested their clients to sell the company shares in short term.
However, we strongly suggest that the report team should include more relevant financial calculations to backup their point of views; in addition, the application of theory was not aliment with their arguments.
After our group had studied and researched about the same case, our opinion is very different from the report team. The detailed analysis will be explained in the following paragraphs.
Through our analysis, we believe that the dividend cut would be more likely to happen in the near future for the company. Thus, we suggest that our clients could sell their shares for the short term; and for medium to long term investing strategies, our clients could buy back shares when the price start to go up. For the following paragraphs, we will, firstly, analysis the company’s financial situations, follow by the theoretical evidences, and finally, conclusion.
If company has reduced their dividend payout, they will have a sum of $150 million per year; we believed the company could definitely get a better use of their retained earnings to improve their financial situation. For example, the company could reinvest in a new project to create future profits (cash inflows) or repay the interest debts to reduce the risk of company.
Generally, according to FPL’s bad circumstances, we were not expect firm’s earning will grows faster than dividend payout ratio, so we predicted FPL group will cut its dividend payout ratio
References: Peirson, G., R. Brown, et al. (2009). Business Finance (10th Edition), Sydney, McGraw‐Hill Australia Pty Limited.