Linear Technologies Essay examples

Debt to Equity ℎℎ ′ 9,771+1,885 Dividend Payout Inventory Turnover = 0.069 Working backwards from the income tax expense, we estimate income tax rate to be 34%. NOPAT is then Operating profit taxes, or 3,137*(1-0.34) = 0.319 Average

Shareholder’s equity would be lower than that shown in 1982 ($318,000) because the company has to pay off interest and principal for many loans. There will be little money left for shareholder’s equity.

If BBBY were to use $400 million in excess cash and $636.3 million in borrowed funds to repurchase it's shares they would increase their basic earnings per share from 1.35 to 1.41 and their diluted earnings per share from 1.31 to 1.37. If BBBY were to use $400 million in excess cash, and borrow $1.27 billion to repurchase their shares, the increase of the basic earnings per share would only be 0.3 while the difference from zero debt to

a) How many shares will the firm have to issue, assuming they issue the new shares at the current price per share?

Those shareholders choosing to collect the $20 cash per share will have to pay capital gains tax on the cash distribution just as though they have sold part of their shares. This can be either considered a short-term or long-term capital gain, depending on when your original Ford shares were purchased. Benefit out of opportunity Cost for the shareholders to invest the $20 in a different firm.

Answer: A firm has two choices with its free cash flow. It can decide to

The repurchase program increases the shareholder’s value. This is because of a rise in the price of the shares of the original shareholders.

The number of shares outstanding will remain the same and thus, the only change in the equity side of the balance sheets for the next three years will be the change in the amount of retained earnings. This change will be equal to the net income of the company for last year because the company will not pay a dividend.

Linear Technology (LT) is like many firms where it used a combination of dividend payments and share / stock repurchases to distribute cash to its shareholders. With a cash dividend, cash is paid directly to shareholders while, with a stock repurchase, a firm uses its cash to buy back its own shares from the market which in turn reduces the number of outstanding shares (Titman and Keown et al., 2011). LT wanted to be able to attract different dividend clienteles of investors which have the both income goals and growth goals (Baker and Wagonfeld, 2004).

Cost of sales was equivalent 78% of total revenues. The company repurchased 44 million shares for $1.57 billion.

In Tysons Foods announcement date was on August 3, 2015. This is the date in which Tysons announce the details regarding an issue of debt or equity. Before the announcement date there were ten analysts who had forecasted Tysons Earnings per Share (EPS). They comprised an EPS range of $0.87 to $0.96 giving an average estimate of $0.921. Which is slightly higher than the actual EPS of $.800. Generating an EPS surplus of -.121 and a percentage change of -13.14%. Which was calculated by taking the actual EPS ($0.800) and subtracted from the average estimated EPS ($0.921), while the surplus percentage change resulted from dividing the EPS surplus by the average estimated EPS.

3. Using the cash flow indicator and investment valuation ratios, discuss which company is more likely to have satisfied stockholders.

MCI’s estimated EPS for 1996 is $3.75. When the number of shares declines to 608.93 after repurchase, EPS would rise. Assuming the earnings forecast for 1996 materializes, EPS would rise to $1.96. This is calculated using the formula below.

substantially below Linear’s record levels set in 2001. In addition, the technology industry was still

The EPS is the earnings available per share that is after meeting all expenses and tax to each shareholder but the dividends paid to the shareholders will not be deducted from the net income.