with the goal of the firm. It should not be the goal of any firm to maximize profits by any legal means necessary. They would not be in business for long if they didn’t. Many accounting frauds have occurred because management wanted to increase shareholder value and make profits for themselves. Just ask Bernie Madoff. According to Ross, “our goal does not imply that the financial manager should take illegal or unethical actions in the hope of increasing the value of the equity in the firm.” Avoiding
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problem of Ford having massive amounts of extra cash. Since Ford has no profitable activities for the extensive amounts of cash, returning the excess cash to shareholders allows them to make profitable investments. Different from a cash dividend, the returned cash will be taxed as capital gain and therefore achieves tax efficiency for the shareholders. When looking at the company’s point of view, they are able to lower the dividend payment because there will be an increase in number of shares. This would
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margin. 1. Who is Zahn? 2. How many classes of stock did Axton-Fisher Tobacco Company had prior to April, 30, 1943? 3. Were Class A shareholders entitled to an annual dividend? Was the dividend contractually enforceable? 4. Where there any differences between the dividend to which Class B shareholders were entitled compared to the dividend that Class A shareholders were entitled to? What are those differences? 5. Do both Class A and Class B shares have voting rights? 6. Besides the dividend, what
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differences between shareholder wealth maximization and profit maximization? If a firm chooses to pursue the objective of shareholder wealth maximization, does this preclude the use of profit maximization decision-making rules? Explain. Profit maximization means the company makes profit maximize. Maximize shareholder wealth states that management needs to bring maximize the value for its owners by make the most efficient resources and reasonable financial management. Therefore, shareholder wealth maximization
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For our paper, we decided to choose stockholders equity. This topic is one of the more important things we have learned so far. Understanding stockholders equity is essential to becoming a good investor. Stockholders' equity, also called shareholders' equity, is the owners' equity in the corporation. It appears on a corporation's balance sheet and reflects the owners' interest in the corporation. You are a stockholder whether you hold or own one share of stock in a corporation or 100 percent
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With Reference to the Data in Appendix B, Figure 3, Do You Think the Shareholders of Scott Electronics Plc Will Be Pleased with the Company’s Financial Performance in 2011? You Are Encouraged to Use Calculations to Support Your Answer. (16 Mark) With reference to the data in Appendix B, Figure 3, do you think the shareholders of Scott Electronics plc will be pleased with the company’s financial performance in 2011? You are encouraged to use calculations to support your answer. (16 mark) David
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Question 1) Bennett Alexander and his friends established Chemalite Inc. on January 2, 2003. A total of 500,000 shares were issued at a price of $1 each; out of which Alexander received 125,000 as his share in exchange for his patent and the remaining stockholders were issued 375,000 shares. Alexander’s share value in the company = $125,000 Stockholder’s share value = $375,000 Total stock = $500,000 On January 15: Chemalite paid $7,500 for legal fees and other requirements for the incorporation
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look to management expectations value of synergies is about 2.666 million euro. Should KLM shareholders be paid as a takeover premium: * Companies can be assumed to the predicted synergies in similar way (KLM -15.7%, Air France 84.3 % - market value differences taking into account) * Merger can take form of an exchange of share in this case no premium must be paid. Assume: 1. Shareholders of Air France agree on merger value to be 2.666 million euro 2. They understand that they
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Is Friedman right to refer to shareholders as owners and employers? Isn’t it odd to refer to corporate expenditures as “taxing and spending?” What do you think of Friedman's "democracy argument" against corporate social responsibility? Instrumental managing for stakeholders means treating them, as the word implies, as “instruments” or “tools” to accomplish the genuine task of corporations: shareholder profits. As tools, managers need to take care of them for them to work well, as a carpenter
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Essay Maximizing shareholder value versus meeting the needs of all stakeholders. I did not grow up in New England and have only lived here for 10 years so Market Basket was relatively new to me. I certainly didn’t know about the higher wages and benefits the employees have enjoyed nor the family dynamics that operated within the company. It does seem odd that a company could have 2 cousins with the same first and last name wrestling for control of a multigenerational business, but truth can
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