Dividend Policy

Grand Metropolitan's P/E ratio is noticeably lower when compared to the other companies within its segmented segments. We found that these low P/E ratios combined with increased profits made Grand Metropolitan a potential target for corporate raiders, i.e. takeover risk.

2) What are Linear’s financing needs? Should Linear return cash to its shareholders? What are the tax consequences of keeping cash inside the firm?

“Financial Statements…provide key information for internal and external decision making.” (Horgren, et al., 2015). Through analysis of the financial information of both JB Hi-Fi and Dicksmith, I have found that investing within JB Hi-fi would be a more profitable and beneficial for shareholders. Moreover not only does JB hi-fi’s financial information (Appendix 1) show that return on Shareholder’s equity is close to 48% of each dollar

According to my analysis of the Accessline’s proposed term sheet, I do not believe that Apex would serve its own interests, or those of its investing partners, by investing in Accessline according to the terms proposed. By investing at the proposed valuation, according to the proposed control and incentive structure, Apex would be shouldering a disproportionate share of the risk should Accessline fail to meet its performance targets, or require fresh inflows of capital from future investment rounds. Nor can Accessline take the sort of steps necessary to protect its investment in the case of management failure.

The third option was to freeze the dividend at $2.48 per share. The dividend payout stayed constant at $461 million from 1994 to 1998. With this, the

Return on Total Assets was 4.43% which is below five percent. That indicates that the company is not accurately converting its assets into profit. The total for Return on Stockholders’ Equity was 8.89%, however financial analysts prefer ROE to range between 15-20 %. The company’s low ROE indicates that the company is not generating profit with new investments. Lastly, Debt-to-Equity ratio for the company was 1.01 which indicates that investors and creditors are equally sharing assets. In the view of creditors, they see a high ratio as a risk factor because it can indicate that investors are not investing due to the company’s overall performance. The totals of these three ratios demonstrate that the company’s financial state is not as healthy as it should be.

Now, according to the latest data from Investopedia, BAC’s Price to earnings ratio, (P/E) is 17.56, which is a high, and I like to keep P/E ratios for companies that I invest in at lower than 14, but since a lot of this growth has occurred since my initial investment, I am ok with its high P/E ratio, although BAC may be a stock that needs to be considered for profit taking by any investor who bought this stock prior to last year. Another consideration for a potential BAC investor is the fact that BAC pays a dividend. Before an investor should consider buying or selling a stock, it should always contemplate how dividends should be incorporated in that decision. BAC current pays a 1.44% annual dividend. (Investopedia, 2016, n.d.). While 1.44% may not seem like a lot, it is attractive to me as an investor because that extra percentage can cover a large portion of the fees involved with trading stocks. I think people tend to overlook these important details when considering an investment.

A cash dividend is a cash payout from a stock. Investors receive a fraction of the issuing company’s retained earnings, based on the number of shares they own. A stock dividend is a payment in the form of additional shares. The company pays dividends in the form of additional shares of stock instead of cash. Companies usually distribute either kind of dividend to reward their stockholders’ since they are not required to pay or offer anything. Cash dividends affect the company’s retained earnings, which affects the stockholders’ equity. Stock Dividends does not affect the total stockholders’ equity. Stock dividends are transferred from Retained Earnings to Contributed Capital. Yes, the action that Sandra Bass has proposed is ethical.

While analyzing AT& T a few differences are noted. As with Verizon, the current ratio did improve with an increase of five percent from 58% in 2005 to 63% in 2006. However, even though debt to equity decreased for both companies AT & T's decrease was only 4% compared to Verizon's significant decrease of 23%. The net profit margin ratio did opposite changes between the two companies while Verizon's increase not even one full percent AT &T's decreased by almost 3%. Even with these significant changes AT & T's price to earnings, as of 2006, was at 20.89 (www.hoovers.com). These variances tell us a couple of things. First, that AT& T has taken on more debt in 2006 versus 2005, but along with that debt they have been able to increase their net profit margin, helping the company in the way of earnings. The strong price to earnings ratio of 20.89 also shows that the shareholders are not faring too poorly either.

The purpose of this case is to have students examine dividend policy--cash dividends, stock splits, and stock dividends--from the viewpoint of its effect on corporate share prices.

c. How should FPL choose between dividends and share repurchases as alternative modes of payment?

FPL Group, Inc. is Florida's largest electric utility company. In 1925, through the consolidation of numerous electric and gas companies, they formed Florida Power & Light Company (FP&L). FP&L grew steadily over the next 50 years until rising fuel costs, operating issues, and construction costs began to decrease profitability. In the mid-1980s, FPL diversified with four major acquisitions - Colonial Penn Life Insurance Company, Telesat Cablevision, Inc., CBR Information Group Inc., and Turner Foods Corporation- in order to minimize the potential risk within the utilities industry.

Approach 4 seems most reasonable to me as the actual investment of Southport minerals is only $20 million, not $120 million with NWC. Making the subsidiary will have SI’s debt obligations not liable to Southport Minerals and only to SI, this is yet another reason why the dividend approach is most reasonable. The financing architecture has made contracts with foreign investors who are providing capital to the firm in lieu of loan guarantees that will lower the cost of borrowing for SI. The entire purpose of this venture is to provide diversification and value to Southport Minerals, not run a separate entity known as Southport Indonesia and retain all the earnings in that country to expand, the entire project needs to benefit solely Southport. The other approaches in discounting the

A dividend is a usually distributed in cash form to stock holders of a corporation approved by the board of director. It may also include stock dividend or other forms of payment. A stock dividend represents a distribution of additional shares to common stockholders. Dividends are only cash payments regularly made by corporations to their stockholders.

Equity Fund Dividend Scheme: The SBI Fund, according to Sharpe estimation is positioned one. Though HDFC Fund got second rank. The SBI Fund is got third rank while JM money related asset got fourth rank.