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
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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 time
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stock repurchases‚ although it will eventually be unbearable. AZO is increasing its fixed borrowing costs‚ increasing its leverage and dependence on the debt markets‚ and decreasing its fiscal viability. Starting in 1998‚ AutoZone had returned capital to shareholders through share repurchases. AutoZone’s consistent repurchases reduced the number of shares outstanding by 39 percent from 2007 to 2011. The repurchases had been funded by operating cash flows and debt issuances. A share repurchase also
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proposition is to repurchase common stocks‚ with bills being paid by issuing bond and excess cash. The pros and cons for Hill Country to repurchase stocks by issuing bonds Share repurchase is a program by which a company buys back its own shares from the marketplace‚ reducing the number of outstanding shares. Because a share repurchase reduces the number of shares outstanding‚ it increases earnings per share and tends to elevate the market value of the remaining shares. Share repurchase is usually an
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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 77 4 3.3 Objectives Of A Buy-back 5 3.4 Resources of Buy-back 5 3.5 Conditions of Buy-back 6 3.6 Sources from where the Shares can be purchased 6 3.7 Procedure 7 4 Law Governing Repurchase Under English Law 8 5 Law governing Repurchase under U.S. Law 8 6 The Debate: Pros and Cons 9 7 Conclusion 11 8 Bibliography
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Accounting and Management Information Systems Vol. 11‚ No. 3‚ pp. 442–454‚ 2012 DIVIDEND POLICY AND FIRM PERFORMANCE: A STUDY OF LISTED FIRMS IN NIGERIA Uwalomwa UWUIGBE1 Covenant University‚ Ogun State‚ Nigeria Jimoh JAFARU Auchi Polytechnic‚ Edo State‚ Nigeria Anijesushola AJAYI Covenant University‚ Ogun State‚ Nigeria ABSTRACT This study basically investigates the relationship between the financial performance and dividend payout among listed firms’ in Nigeria. It also looks at the relationship
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----------------------------------- Jul 23‚ 2006 Industry Report of the FMCG sector profiling P&G‚UL‚KMN‚ ----------------------------------- Financial Statement Analysis In the healthy and growth inducing economic scenario of the 2000’s‚ P&G has seen double digit revenues growth to around $56b in 2005. Keeping its costs low has seen it achieve healthy profit margins of around 11% - 12%. Refer Table 1. Table 1 Margins P&G (in %) 2003 2004 2005 Gross Margin 49 51
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Chapter 4: Analysis of Financial Statements To keep this chapter from involving too much memorization‚ we provide our students with a formula sheet for use on exams. That makes a few of the questions trivially easy‚ but most require some thought‚ and some are downright challenging. Even the very easy ones make students think about the ratios. The challenging questions are labeled CHALLENGING‚ and most students will agree with that designation. Some of these questions are just definitions‚ but others
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CHAPTER 17 Payout Policy Chapter Synopsis 17.1 Distributions to Shareholders A corporation’s payout 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
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Predicting a Firm’s Financial Distress: The Merrill Lynch Co. Richard Hamilton Mike Rakes Brandon Sather Teresa Sexton Narrative: Merrill Lynch is financing the business through Cash provided by financing activities – the operating activities loss is offset by increases in long-term borrowings. 1. Evaluate the cash position at year-end Report Date 12/28/2007 12/29/2006 12/30/2005 Cash & cash equivalents 41‚346‚000 32‚109‚000 14‚586‚000 The cash position
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