Fundamentals of Corporate Finance‚ 2e (Berk) Chapter 17 Payout Policy 17.1 Cash Distribution to Shareholders 2) The way a firm chooses between alternate uses of free cash flow is referred to as A) retention ratio. B) payout policy. C) call policy. D) debt policy. Answer: B 3) The date on which the board of directors of a company authorizes the dividend is called the ________ date. A) declaration B) record C) ex-dividend D) distribution Answer: A 4) The firm will pay the
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Dividend Policy at Linear Technology Of the 16 companies on the SOX index‚ six paid dividends and Linear Technology is one of them started at the second quarter in 1993 which is 5.3 million in total. However‚ in the case‚ according to Coghlan‚ “The quarterly dividend was initially set at $0.05 per share. This amounted to $8.3 million‚ or 15% of FY 1994 earnings.” And their most recent dividend in 2002(cause in the exhibit2‚ there’s only threes quarter’s data in 2003‚ so that’s why I choose 2002
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TO: Board of Directors‚ Linear Technologies FROM: Mr. Paul Coghlan CFO‚ Linear Technologies RE: Dividend Policy Summary: Based on the financials to date and the forward looking capital investments required Linear should increase their dividend payout by $0.01 per share. Entering the fourth quarter of 2003 the market seems to show continued signs of improvement. The company has shown steady growth and revenues are forecasted to exceed 2002’s by 19%. The forecast shows net income coming in
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Describe the payout policy of Linear Technologies historically. Describe Linear’s current cash position and its financing needs. The company initiated its dividend in 1993 with a relatively conservative payout ratio of 15%‚ based on a quarterly dividend of $0.05/share/quarter ($0.00625 split adjusted as per Exhibit 3). As of 3Q2003‚ the dividend is also $0.05/share/quarter‚ adjusted for stock splits‚ which translates into a payout ratio of . The payout ratio is currently 27.5% on an as adjusted
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Linear Technology Linear Technology is a technology company that focuses on the different elements of semiconductors. The company mostly focuses on analog products within the semiconductor portion of the electronic industry. Linear Technology was unique in their payout policy in the sense that they started with announcing dividends and then continued onto repurchasing. Linear started dividends to gain the respect of investors as well as show that buying shares in the company of Linear was less
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recommend? 2. What happens to Gainesboro’s financing need and unused debt capacity if: a. no dividends are paid? b. a 20% payout is pursued? c. a 40% payout is pursued? d. a residual payout policy is pursued? Note that case Exhibit 8 presents an estimate of the amount of borrowing needed. Assume that maximum debt capacity is‚ as a matter of policy‚ 40% of the book value of equity. In addition‚ please check TN_26 provided in blackboard which will help you verify this question.
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CHAPTER 17: PAYOUT POLICY Chapter 17 Learning Objectives 1. Describe how dividends are paid out and how corporations decide how much to pay. 2. Explain how stock repurchases are used to distribute cash to investors. 3. Explain why dividend increases and repurchases are good news for investors and why dividend cuts are bad news. 4. Explain why payout policy would not affect shareholder value in perfect and efficient financial markets. 5. Show how market imperfections‚ especially the different
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Professor Amit Seru Linear Technologies Case “I pledge my honor that I have not violated the Chicago Booth honor code for this assignment” Viral Patel 1. Linear’s historical payout policy has been to pay a quarterly dividend of $0.05/share and use any additional funds to repurchase shares to increase shareholder value. This kept their payout ratio to around 15% until about 2002 where this dividend payout moved the ratio to around 25% to 30%. Currently Linear is sitting on a large
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Linear Technology Linear Technology is a corporation that designs‚ manufactures‚ and markets integrated circuits and has also been called "one of the tech industry’s most profitable companies” by Forbes magazine in 2010. This report will examine the company’s dividend policy and our group recommendation for Linear Technology moving forward. Linear Technology (LT) does not have any debt in the company. Based on M&M proposition this means that LT can increase its debt to maximize the
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Journal of Banking & Finance 27 (2003) 1297–1321 www.elsevier.com/locate/econbase Corporate governance‚ dividend payout policy‚ and the interrelation between dividends‚ R&D‚ and capital investment Klaus Gugler * Department of Economics‚ University of Vienna‚ WP No. 9803‚ Br€nnerstrasse 72‚ 1210 Vienna‚ Austria u Received 12 October 2000; accepted 5 November 2001 Abstract This paper investigates the relationship between dividends and the ownership and control structure of the firm
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