Value Market. Of UST’s total portfolio of products, approximately 1% of the company’s 1998 tobacco sales revenue was derived from the Price Value Market. UST is facing aggressive pricing, heavy competition from new products and they are losing market share in their core operations. Their growth and pricing strategy was to introduce similar products rather than to cut prices. Further concerns are that UST has no plans to expand internationally, and both the CFO and President resigned in February 1997
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has not paid any dividends on any shares during this period. There has been no change in the number of shares outstanding for many years. The share capital at the end of 1999 is as follows: Preferred Class A shares 2,000 shares, stated value of $200, 5% non-cumulative dividend Preferred Class B shares 5,000 shares, stated value of $100, $3.50 cumulative divided Common shares 20,000 shares 6 Required: a) Calculate the dividends payable to each class of shares if the Board of
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Case 2 -‐ Solution / expected answers Part 1 Question 1 The correct answer is: 20.00% 18.00% Annual Return Annualized Volatility 15.00% Explanation: Using the return from Technical Document 4 we compute the annual return: !"!!"!!"#$ 3314.46 r= −1= − 1 = 20.00% !"!!"!!"#$ 2762.05
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9-204-066 REV: FEBRUARY 11, 2004 MALCOLM P. BAKER ALISON BERKLEY WAGONFELD Dividend Policy at Linear Technology It was April 2003 and Paul Coghlan was pulling together his notes for Linear Technology’s board meeting the following day. As chief financial officer of the Silicon Valley semiconductor company, Coghlan was responsible for making a recommendation about whether or not Linear should increase its dividend this quarter. Coghlan and Linear’s CEO Robert Swanson were pleased with the company’s
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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
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Interpreting Stockholders’ Equity * Corporate Ownership * Shares of stock can be purchased in small amounts. * Ownership interests are transferable. * Stockholders are not liable for the corporation’s debts * Common stock – the basic voting stock issued by a corporation to stockholders. * Voting rights * Dividends * Residual claim – if the company ceases operations, stockholders share in any assets remaining after creditors have been paid.
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verifiability, Timeliness, and Understandability Cash Flow: From operations, Investing, and financing Indirect method-Adjust from NI. Direct method- Collections from customers, Payment to supplier, operating expenses, income tax. | IFRS | ASPE | Dividend paid and revenue | Consistent | Financing | Interest expense and revenue | Consistent | Operating | Revenue Recognition: CIP to cash, AR to Billings, COGS to Revenue (Difference is CIP), Cash to AR, at end close Billing and CIP Gross profit=
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large payout under the dividend or share repurchase. * Market value of equity declines by $1.8 billion, the result of the payout of $3 billion, which is offset by the benefit of the debt tax shields ($1.2 billion). WACC after recapitalisation 1. Cost of debt: change from AAA (consistent with no debt) to a BB/B rating reflecting the higher risk Leverage & Unleveraged firm value $3 billion in debt * Use to buy back reduce the number of outstanding shares. Use this borrowed money
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Problem 14-10 A. 1. 2011 Dividends = (1.10)(2010 Dividends) = (1.10)($3,600,000) = $3,960,000 2. 2010 Payout = $3,600,000/$10,800,000 = 0.33 = 33% 2011 Dividends = (0.33)(2011 Net income) = (0.33)($14,400,000) = $4,800,000 (Note: If the payout ratio is rounded off to 33%, 2011 dividends are then calculated as $4,752,000.) 3. Equity financing = $8,400,000(0.60) = $5,040,000 2011 Dividends = Net income - Equity financing = $14,400,000 - $5,040,000 = $9,360,000 All of
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Hill Country snack food Co. Case Hill Country’s operating strategy and its impact on business risk & financial strategy The operating strategy is to produce high quality products through efficient, low-cost and aggressive operation as well as singular management. In detail, the company provides several kinds of snacks to satisfy different type’s customers. The company expands its presence into sporting events, movie theaters and other leisure events to attract customers. An efficient and
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