...Xu Shu Li Yifan Wu Class Session: MWF 1:50-2:45 PM Case 1: Dividend Policy at FPL Group Inc. Because of FPL’s reluctance to increase its dividends and increased competition in the electric utility industry, Merrill Lynch’s utility analyst downgraded FPL Group Inc. Kate Stark, utility analyst at First Securities Corporation, wondered whether she should issue an updated report about stocks of FPL. We investigated the potential risks faced by FPL and its payout policies, and according to the results, we recommend the shareholders to hold FPL’s stocks. Based on our analysis, there are several important issues confronting the FPL Group in May 1994. The first one is the potential competitors and losses resulting from retail wheeling. Although Florida does not consider a retail wheeling proposal now, retail wheeling is still a threat because of the general trend of the industry. FPL needs to ensure that it has the ability to compete with other companies both in and out of state. Also, negotiations between FPL and Florida Municipal Power Agency are still continuing. Florida Municipal Power Agency accused FPL of violating the NEPA of 1992 by charging excessive rates and denying access to its utility transmission system. FPL is also concerned with the increased long-term interest rates which will result in a larger interest expense accompanied by underperformance. Due to the relatively high levels of debt, FPL could not pass all interest increases to customers. FPL’s stock price has fallen...
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...FPL – An Overview 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. To address problems in operations, FPL began a rigorous program of Japanese-inspired quality control. Management succeeded in transforming FPL into a lean operational system resulting in a drop in scheduled downtime from 18% to 4%, while customer complaints also fell by 60%. By 1989, FPL was recognized as “one of the best-managed U.S. corporations.†Despite the progress in quality, FPL was still dealing with problems: Colonial Penn was losing money, there were safety concerns about a particular nuclear plant, and demand was growing faster than capacity. In 1989, James Broadhead succeeded Chairman Marshall McDonald. Broadhead placed an emphasis on commitment to quality and customer service, increasing focus on the utilities industry, expanding capacity, and improving cost positions. He took measures to scale back the intense quality controls while still working...
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...Dividend Policy at FPL Group, Inc. Executive Summary Florida Power & Light Company was formed in 1925 through the consolidation of numerous electric and gas companies. After enjoying steady growth until the 1970s, FPL began experiencing operating problems and reduced profitability due to factors like rising fuel costs and construction over-runs. To address these problems, Chairman Marshall McDonald decided to diversify into higher growth businesses and guided FPL to make four major acquisitions- Colonial Penn Life Insurance Company, Telesat Cablevision, CBR Information Group Inc. and Turner Foods Corp. FPL Group also established a real estate development subsidiary called Alandco, and an alternative energy subsidiary called ESI Energy. To address complaints from consumers, FPL instituted a quality control program inspired from Japanese methodologies. Despite all these moves, FPL continued to face underlying growth problems due to losses at Colonial Penn business, federal concerns over FPL’s nuclear reactor safety and going overboard with their quality control program. James Broadhead succeeded McDonald in 1989 and started developing a long range strategic plan for FPL. Broadhead simplified the quality control program. He wanted FPL to focus on its core business and made plans to sell several non-utility businesses that the group held. Broadhead started an aggressive capital expenditure program of $6.6 billion for expansion. To cut costs, Broadhead flattened the organization...
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...Nithin Geereddy 80842082 Corporate Finance Tuesday Section Dividend Policy at FPL Group, Inc Case Q1) Why do firms pay dividends? What, in general, are the advantages and disadvantages of paying cash dividends? Ans: The purpose of dividend payouts is to return wealth back to the company shareholders instead of using it for operations. Dividends provide investors with regular income from their investments and act as an incentive to continue or start investing in the company. The company’s share price will drop in relation to the dividend payout, because a company’s value has not risen, they are just allocating money differently. All dividends must be declared by the board of directors and are taxable as income to the recipients. Taking into account the many theories of dividend policy including the Dividend Irrelevance, we can conclude that firms should pay out as dividends “any cash flow that is surplus after the firm has invested in all available positive net present value projects.” In some cases, this may be a way of signaling that the company is financially stable and capable of fulfilling dividend obligations. It may also be a way for companies to mitigate agency problems when they have excess cash. Advantages of paying cash dividends include: * A means of distributing excess cash and lacking...
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...1. Why do firms pay dividends? What is general, are the advantages and disadvantages of paying cash dividends? Firms pay dividends based on their finance and investing strategies and decisions. If a firm is looking to finance a project through borrowing the company may want to give cash dividends to its shareholders to reduce the amount of their cash balances on hand. Also dividends are a way to give back to their investors and shareholders. By them receiving the cash dividends they are gaining immediate cash payment to spend in their own way or to reinvest with the company. Also stocks that offer dividends are sometimes more favorable to investors because they know they will be getting routine income from the stock. The advantages of paying cash dividends are based in what signals it gives to the market. If the company is giving out dividends and the dividends increase this is a good signal to the market that the company is doing well and that the stock is on the rise. Also, in times when the stock price decreases but the company continues to pay out the normal dividends it shows the market that the company is not nervous and will rebound back soon. Some disadvantages of paying cash dividends are that it can also give bad signals to the market. If dividends decrease it can signal to the market that the company is not doing well and the value of the stock will decrease. From this signal investors and shareholders might sell the stock, further driving down the stock price of...
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...Group Assignment 4 Dividend Policy at FPL Group, Inc. 1. Why do firms pay dividend? What, in general, are the advantages and disadvantages of paying cash dividends? The sole purpose of dividends per se is to return wealth back to the shareholders of a company. Shareholders take risk and invest in company and the dividends are rewards for commitment, trust and risk-taking. Dividends transfer economic value from the company to the shareholders instead of the company using the money for operations. Often in case of more established and mature companies that are growing more slowly they are not “hungry” for cash and to reward the shareholders by sharing the wealth those companies pay dividends. Similarly paying dividends often is a sign of sound business model and stability of company at large. Both paying and not paying dividends and cash dividends have their own respective pros and cons as presented below: Advantages: 1. Dividends may appeal to investors who desire stable cash flow but do not want to incur the transaction costs from periodically selling shares of stock. 2. Behavioral finance argues that investors with limited self-control can meet current consumption needs with high dividend stocks while adhering to the policy of never dipping into principal. 3. Managers, acting on behalf of stockholders, can pay dividends in order to keep cash from bondholders. 4. The board of directors, acting on behalf of stockholders, can use dividends to reduce the cash available...
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...FPL – An OverviewFPL 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. To address problems in operations, FPL began a rigorous program of Japanese-inspired quality control. Management succeeded in transforming FPL into a lean operational system resulting in a drop in scheduled downtime from 18% to 4%, while customer complaints also fell by 60%. By 1989, FPL was recognized as “one of the best-managed U.S. corporations.” Despite the progress in quality, FPL was still dealing with problems: Colonial Penn was losing money, there were safety concerns about a particular nuclear plant, and demand was growing faster than capacity. In 1989, James Broadhead succeeded Chairman Marshall McDonald. Broadhead placed an emphasis on commitment to quality and customer service, increasing focus on the utilities industry, expanding capacity, and improving cost positions. He took measures to scale back the intense quality controls while still working to preserve...
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...consist of group work leading to (a) an active discussion and (b) a written report on one of the case studies. At the beginning of term, student groups will be randomly assigned to one of the following two cases: “Valuation of AirThread Connections” or “Dividend Policy at FPL Group, Inc.” Please find out which case you have been allocated to and the week in which that case is discussed. In the following I explain which deadlines you have to meet and how effort towards each deadline contributes to your coursework mark: • Deadline 1. You must read up your case material and prepare oral answers to the case questions by the Thursday lecture to which your case discussion is allocated. Groups that have not prepared before the case discussion will suffer a coursework mark penalty. The penalty will be 10 points of the coursework mark (e.g., a drop from 60% on your submission to 50% overall). Groups that have fully prepared and present their arguments during the class discussion in a lively and enthusiastic way will receive a 5-point coursework mark uplift (e.g., an increase from 70% to 75%). • Deadline 2. The next deadline is for submission of your complete case report. This must be done on Moodle, by the Thursday one week after the case discussion week. Therefore, the deadlines for submitting the written report are as follows: – Groups assigned to the AirThread case: Thursday 27 March – Groups assigned to the FPL case: Thursday 3 April. Advice on how to write the case report Each group will have...
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...Case Analysis - FPL Energy FPL Energy is one of the nation’s leading independent generators of electricity. Dedicated to generating clean energy, 80 % of its capacity is fueled by clean and renewable resources. The United States is the nation with the largest generator of wind energy, and it operates the two largest solar fields in the world. FPL Group, with annual revenues of more than $8 billion, is one of the nation's largest providers of electricity-related services. Its principal subsidiary, Florida Power & Light Company, serves approximately 3.9 million customer accounts in Florida. FPL Energy, LLC, and FPL Group energy-generating subsidiary, is a leader in producing electricity from clean and renewable fuels. 2. Historical Overview FPL Group is a far different company today than the one Jim Broadhead joined in January of 1989 when he became president and chief executive officer. FPL Group was then engaged in a number of businesses unrelated to its core electric skills, including insurance and financial services, real estate, cable television, and agriculture. The company's principal subsidiary, Florida Power and Light, was considered a well-managed utility with an emphasis on quality. However, the utility's spiraling costs had resulted in electric rates among the highest in the Southeast. Today, FPL Group is nationally known as a high quality, efficient, and customer-driven organization focused on energy-related products and services. With a growing...
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...specific cases that are assigned to this course are available for download for a fee. Group Papers/Presentations: Each student will be put into a group, and each group will submit a paper and present a particular case. The paper should include the answers to the questions regarding the case assigned prior to the presentation day. Presenting a case involves summarizing the case, answering the questions, and leading a class discussion for the case based on the questions. Please do not change groups during the semester. Peer Evaluations: To prevent free-riding, I will ask that each group member fill out a confidential peer evaluation report by the end of the course. You should use the form to outline each team member’s contribution (excluding your own). Failure to submit an evaluation will result in a penalty of your overall grade. Case #1: Financial Institutions/Intermediaries; Corporate Governance “The Role of Capital Market Intermediaries in the Dot-Com Crash of 2000” Case #2: Valuation “Mercury Athletic Footwear: Valuing the Opportunity” Case #3: Capital Budgeting “Tokyo Disneyland and the DisneySea Park: Corporate Governance and Differences in Capital Budgeting Concepts and Methods Between American and Japanese Companies” Case #4: Cost of Capital “Lex Service PLC - Cost of Capital” Case #5: Dividend Policy “Dividend Policy at FPL Group, Inc....
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...“Stafford County Volunteer Regional Food Pantry” By: Pedro Correa Professor: Erica Ellsworth, MA English 215 August 10, 2012 Stafford County Volunteer Regional Food Pantry It is very important to support regional food pantries. In times of economy instability, hunger has reached levels that we cannot ignore. New Federal, State and local programs are helping people with economic hardships but those programs are not enough. We have to do more to help the current situation especially in our communities. As of 2012, hunger continues to be a worldwide problem. According to the Food and Agriculture Organization of the United Nations, "850 million people worldwide were undernourished in 2005 to 2011, the most recent years for which figures are available" and the number of hungry people has recently been increasing. The official poverty rate in the U.S. has increased for four consecutive years, from a 26-year low of 11.3% in 2010 to 12.7% in 2012. This means that 37.0 million people were below the official poverty thresholds in 2010. This is 5.4 million more than in 2009. The poverty rate for children under 18 increased from 16.2% to 17.8% over that period. Poverty is the state of being without the necessities of daily living, often associated with need, hardship and lack of resources across a wide range of circumstances. For some, poverty is a subjective and comparative term; for others, it is...
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...Chapter 4 Concentrating Solar Power Clean energy for the electric Grid Gary Gereffi and Kristen Dubay Jess Robinson and Yuber Romero Contributing CGGC researchers: by Summary Concentrating solar power (CSP), also referred to as concentrating solar thermal power, represents a powerful, clean, endless, and reliable source of energy with the capacity to entirely satisfy the present and future electricity needs of the United States. Concentrating solar power plants produce no carbon dioxide (CO2), thus reducing carbon emissions from electricity generation by approximately 600 pounds per megawatt-hour (BrightSource Energy, 2008).4 The evolution of CO2 emissions regulations, the pressure of international fossil fuel prices, and the experience, knowledge, and technological readiness amassed during several decades of CSP research have launched the technology into a new era of commercial reality. The United States and Spain have integrated CSP into their national electricity supply grids through large-scale commercial plants. Eight of the 13 biggest planned CSP projects in the world will be located in California and Arizona. The Sun Belt region of the United States, particularly the Southwest, is one of the largest areas in the world for CSP exploitation because of its abundant sunshine. In addition to generating a new clean source of energy, expansion of the industry promises to create economic opportunity for many different businesses along multiple stages of the value...
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...Draft Report On Financial Evaluation of Flipkart response to Amazon’s challenge Submitted To: Dr. Anupam Rastogi Submitted By: Group 4 MBA Capital Markets Nikhil A001 Nikita Agarwal A002 Niket Jithra A029 Nitish Khator A034 Pankaj Shah A046 Nilabh Shekhar A047 1|Page Introduction The e-Commerce industry was in its infancy for the larger part of the previous decade. However, in last three years, the industry has witnessed an incredible growth of 150%, increasing from USD 3.8 billion (INR 19,249 crores) in 2009 to USD 10 billion (INR 47,349 crores) in 2013. A number of business models for e-Commerce have evolved and are in varying stages of maturity. The resultant industry has come to be dominated by Flipkart, Amazon and Snapdeal in the non-travel related ecommerce market. e-Commerce is a capital intensive business and with problems abounding in technology infrastructure, low profit margins and poor physical infrastructure (logistics and distribution). In spite of this Flipkart has managed to raise $1.2 B this year which was followed by Amazon declaring an investment of $2B. In order to meet this challenge head – on Flipkart has planned to spend significant amount of capital in back-end infrastructure, logistics and warehouse, technological upgrade, scouting for new acquisitions, customer acquisition and talent. Paucity of significant larger players has resulted in money chasing few firms which have resulted in distorted valuations of companies. The companies have been...
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...Cameron Hays Final Paper 8/11/12 Company: Independent Electric Supply Independent Electric Supply, Inc. was founded in 1976, as a small distribution center built to cater the growing market of Electricians that worked in the high-tech aerospace industry. Realizing a need to offer a wide variety of electrical equipment Independent formed partnership with East Coast suppliers in order to provide a larger amount of Electrical products. When Independent Electric supply formed they had only 10-employee but with steady growth and strong business partnerships Independent grew into the twelfth largest supply chain in the nation. Independents line card includes the following resilient products; Line Card |Ballasts |Fittings |Strut | |Batteries & Flashlights |Fuses |Switches | |Boxes |Heaters, Electric |Tapes | |Cable Tray |Instruments |Time Clocks | |Chimes, Bells, Buzzers |Lamps |Tools | |Conduit...
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...Abstract This paper address the challenges to determine what parts of the Affordable Care Act can apply to Puerto Rico and the impacting the Medicare, Medicare patient services and employees. Most of the people in the island think that the Affordable Care Act is giving more security and help to address the existing disparities in the healthcare system. With the new Patient Protection & Affordable Care Act, the insurance companies can no longer drop the coverage if one becomes sick, bill individual into bankruptcy because of an annual or lifetime limit, and they will not be able to discriminate against anyone with a pre existing condition. Most of the Medicare and Medicaid community suffers do to the imbalance in our healthcare system this situation affects the quality of care and places a financial strain on the government, individuals and families, employers and employees, and public and private providers. Most of the Medicare beneficiaries have to enroll in the MA program to help them to succeed and receive the adequate treatments without MA to help the disadvantaged seniors on the island, Puerto Rico's elderly citizens will be forced to turn to Mi Salud in larger numbers. Although Mi Salud is scheduled to receive an average of $690 million annually during the next five years, the widening deficit in MA funding is likely to create a net negative impact on federal funding for healthcare in Puerto Rico. The Health care Policies and Issues Ethical concerns and issues ...
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