How will Gainesboro’s various providers of capital‚ such as its stockholders and creditors‚ react to a declaration of no dividend? What about the announcement of a 20% or 40% payout? How would they react to a residual payout policy? Mainly divided by two categories: income seeking investor or capital gains investor 1) Institutional growth oriented: capital gains investor These types of investors are interested in companies which have a high growth potential. They want the company to keep profits
Premium Finance Stock market Stock
investors is when the firm uses cash to buy shares of its own outstanding stock‚ also known as A) dividend investment. B) retained earnings. C) initial public offering. D) share repurchases. Answer: D 10) A firm may announce its intention to buy its own shares in the open market like any other investor‚ also known as a(n) A) open market purchase. B) tender offer. C) targeted repurchase. D) greenmail. Answer: A 11) When a firm offers to buy its shares at a pre specified price during a short
Premium Dividend
CHAPTER 17: PAYOUT POLICY Chapter 17 Learning Objectives 1. Describe how dividends are paid out and how corporations decide how much to pay. 2. Explain how stock repurchases are used to distribute cash to investors. 3. Explain why dividend increases and repurchases are good news for investors and why dividend cuts are bad news. 4. Explain why payout policy would not affect shareholder value in perfect and efficient financial markets. 5. Show how market imperfections‚ especially the different
Premium Dividend Stock market Corporate finance
Blaine Kitchenware Case Write-Up 1. Based on available information of BKI‚ we believe its current capital structure and payout policy are not quite appropriate. First of all‚ the company is under-levered and over-liquid when it comes to its capital structure. This company in fact issued no debt in 2006. This may result from its conservative management strategies and the fear of risk involved in the process of debt raising. And since the company is totally equity financed‚ it did
Premium Finance Stock market Stock
Dubinski From: Date: 1/13/2013 Re: BKI stocks repurchase To review Blaine Kitchenware Inc.’s (BKI) current debt‚ equity and leverage levels with respect to the highly advisable repurchase of 14 million shares of stock at $18.50 per share and the related‚ necessary financing. BKI is currently highly over-liquid and under-levered. The firm can anticipate elevated tax rates due to the lack of debt held. BKI has also experienced falling earnings per share (EPS) due to the over issuing of stock. Similarly
Premium Balance sheet Asset Stock
A Project Of Law of Business Association-II On Buy Back of Shares Submitted to:- Submitted by:- Asso. Prof. (Dr.) Kondaiah J. Roll No. - 2009 B.A. LL.B. Enrollment No. A-0 VIII Trimester III Year TABLE OF CONTENTS 1 Introduction 3 2 Understanding the Concept 3 2.1 Conceptual Conundrum 3 2.2 Methods of ‘buy-back’ 3 3 Law Governing Repurchase Of Shares In India 4 3.1 Introduction 4 3.2 Rationale behind Section
Premium Stock market Corporate finance Corporation
in the stock price during that period‚ but‚ for the most part‚ the stock price has been on the rise. The number of share repurchased by AutoZone during that period of time has also been consistent with the stock price as it has increased steadily. The ROIC has also mainly increased over the past five years. Moreover‚ AutoZone has been able to steadily increase its earnings per share. However‚ stock purchases; reduce the supply of stock in the market‚ boosting the price. Many shareholders expect
Premium Stock market
policy determines if and when it will distribute cash to its shareholders by issuing a dividend or undertaking a stock repurchase. To issue a dividend‚ the firm’s board of directors must authorize the amount per share that will be paid on the declaration date. The firm pays the dividend to all shareholders of record on the record date. Because it takes three business days for shares to be registered‚ only shareholders who purchase the stock at least three days prior to the record date receive the dividend
Premium Stock market Dividend Corporate finance
However‚ in 1995‚ the stock’s performance was poorer than the S&P. With shareholder’s getting restless‚ the idea of a stock repurchase was being considered. Depending on which option MCI chooses—stock repurchase with debt issuance or open market repurchase program—the message being sent could be different. Let’s consider option one—MCI issues debt and uses the proceeds to repurchase stock. According to the article “Raising Capital: Theory and Evidence” by Clifford Smith‚ the market would likely react
Premium Stock market
judiciously would make it appropriate and would help Blaine achieve its true potential. Q2 ‐ Should the CEO (Victor Dubinsky) recommend a large share re‐purchase to the Board of Directors? What‚ in your opinion‚ are the advantages and disadvantages of this option? We believe that Mr Victor Dubinsky should recommend the share repurchase to the board‚ biggest reason being excess liquidity and absence of debt financing. Number of
Premium Finance Stock Stock market