A Report On Corporate Finance Management

1485 Words Nov 29th, 2014 6 Pages
Introduction
This coursework on corporate finance management is based on real-world, based on Sainsbury’s grocer. Sainsbury’s is one of the largest supermarkets in the UK, founded in 1869, by John James Sainsbury.

In 1922 Sainsbury’s becomes the largest grocery retailer. 7th May 2014, Sainsbury’s posted a 5.3 percent rise in annual profit, its slowest growth in nearly a decade. In October 1st 2014 Sainsbury’s announces, cutting its annual sales forecast and said it would review its dividend as part of a wider examination of the business.

The aim of this report is to analyse whether the announcement may affect the firm value, and if considering investing in Sainsbury’s how it will affect the investment decision old or new. For Sainsbury’s cutting its annual sales forecast and also reviewing its dividend, this announcement will have an impact on the followings:

• Sainsbury’s Dividend
• Modigliani and Miller (MM)
• Tax Effect
• Efficient Market
• Signaling Hypothesis
• Effect on new and old stockholders

Dividend is defined as a payment made by a corporation to its shareholders and investor. Sainsbury’s normally pays on interim dividend each December/January and a final dividend for the previous financial year in July. Fig 1. http://www.j-sainsbury.co.uk/investor-centre/shareholder-centre/dividends/#header

Dividend policy is a major financing decision that involves with the payment to shareholders in return of their investment. Every firm operating in a given industry…
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