...HAVELOCHE CORPORATION INTRODUCTION Phil Grange, the CEO of Haveloche Corporation, have been asked to be a guest lecturer at Cokesbury College. One of the finance professors has specifically requested a discussion on Haveloche's dividend policy, hi preparation, Phil has reviewed several textbooks that Dr. Roche, the professor, has provided, and has printed out the history of dividends for the nine years that Haveloche Corporation has been publicly traded. BACKGROUND Haveloche Corporation was formed in 1989 as a research firm dedicated to innovative electronic design. Haveloche sells patents to large electronics manufacturing companies. For innovative inventions that are immediately useful to these electronics firms, Haveloche receives handsome gains. Many of the inventions and patents also wind up sitting on a shelf, even after Haveloche goes to the effort and expense of gaining the patent. Inventions that hit the jackpot make up for the losers over time, but the successes are sporadic and create large fluctuations in Haveloche's earnings. The firm grew up very quickly until its initial public offering in June of 1994 due to several key patents that were snatched up by several large computer manufacturers. By 1994, there were 28 researchers in the Haveloche think-tank, and the firm had developed the reputation for cutting edge research with a market orientation. Haveloche was also one of the larger pure research firms, and appeared to have become large enough to ensure more...
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...Phil Grange, the CEO of Haveloche Corporation, has been asked to be a guest lecturer at Cokesbury College. One of the finance professors has specifically requested a discussion on Haveloche's dividend policy. In preparation, Phil has reviewed several textbooks that Dr. Roche, the professor, has provided, and has printed out the history of dividends for the nine years that Haveloche Corporation has been publicly traded. The case addresses the presence of data that does not seem to correlate with any particular dividend policy hypothesis (except for irrelevance, perhaps). The student is asked to graphically analyze the price data. Astute readers will understand that dividends are not the only element at work on the firm's stock price. The case highlights the difficulty of determining an optimal policy since other factors cannot be held constant while dividends are manipulated in the current point in time, and that even if that were possible, the variety of opinions and hypotheses surrounding dividend policy does not indicate any concrete conclusion as to what is an ideal policy. 1. Enter the data from tables 1 and 2 into a spreadsheet program. Graph a scatter plot of the dividend with the stock price. Does there appear to be a correlation? 2. Plot the change in price (from t-1 to t+1) with the dividend amount. Does there appear to be a correlation? Plot the change in price with the year to year change in the dividend. Does there appear to be a correlation? 3. Summarize...
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...Financial Analysis of Haveloche Corporation Haveloche Corporation is a research and development company, which translates into sporadic cash flows over time. There are times when genius ideas bring in lots of cash flow for the company. But there are also times where those genius ideas are shelved because no one has an interest in that patent. The ever changing cash flows prove to be difficult for decision making, especially when it comes to whether the company should give back to its investors or not. Haveloche is constantly faced with the predicament of deciding what dividend policy is best for the organization and the investors. The company’s CEO listed the stock prices and dividends for us to take a look at, so let us do just that. Below are the two scatter plots created from the information given in the case. The first scatter plot charts the dividend and the stock price. As you can see from the scatter plot, there is no obvious correlation between the two. The dividend does not necessarily move in the same direction or the opposite direction of the stock price. The second scatter plot charts the change in the stock price with the dividend. As you can also see with this scatter plot, there is no real correlation between these two. There are 3 theories of investor preference for dividend versus capital gains: (1) Dividend Irrelevance Theory or Modigliani Miller (2) “Bird-in-the-hand” Theory (3) Tax Preference Theory. According to Modigliani Miller...
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...Trump 1 I’ve decided to do this leadership profile assignment on the Donald Trump for several different reasons. First off real estate is my profession and it’s what I truly love and believe in. Also, I feel with the current economic situation that we are in; it would be a very interesting subject to report on. Since we are in the worst economy since the Great Depression and a terrible housing market, it would make it more interesting. However, there are some people like Donald Trump that are taking advantage of the economy and thriving and growing their business. Also, Donald has experienced his own rough times before. In the early 1990’s, he was billions upside down and on the verge of losing everything. Consequently, he worked his way out of it and has grown his business since. He has ventured into new businesses and has gone main stream into television. Since the Trump Organization operates in many different aspects of real estate including everything from: purchasing, brokering, and leasing, etc. I feel it would be excellent topic to do this assignment on. Donald has had many major accomplishments in his life and has plenty of failures as well. Most recently, he is known for his reality show “The Apprentice.” His show he is both the host and the producer. Each week contestants are given a task and if you are successful you will get to stay another week. If you team loses, one of your members will be brought back into the board room and someone will get...
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...Case 1 TEACHING NOTE KHF CORPORATION INTRODUCTION This case involves the evaluation of Kitty (Hawk Food), Inc., a restaurant food wholesaler in eastern North Carolina. The firm is experiencing difficulty paying trade debt and collecting trade receivables on time, which is causing cashflow difficulties and threatening the creditworthiness of the firm. The case should require 1 to 1 1/2 hours of outside preparation by students, and can be effectively discussed in a one-hour class. It is appropriate for managerial finance courses at the undergraduate level, and perhaps at the lower MBA level as a minor exercise. KHF Corporation is experiencing a threat to its creditworthiness due to difficulties in paying trade payables. Its colorful CEO, responsible for collections of receivables, is not providing for collections very well. He is much more of a good ole' boy marketing type. The firm is not performing very well, and faces large seasonal swings in business. The student is tasked with solving the dilemmas posed by the case. SUGGESTED TEACHING APPROACH We suggest assigning this case after coverage of a) financial statement analysis and b) opportunity cost of failing to take a cash discount. While collections of receivables and improving payments are implied as a solution to this situation, the real issue is the opportunity cost of failing to take a cash discount. 100% of the business of KHF involves credit purchases of inventory. KHF is not taking advantage...
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