– HOMEWORK ASSIGNMENT Steven Kelley 5/8/13 Problem Based on Chapter 14‚ Residual Dividends Middlesex Plastics Manufacturing had 2011 Net Income of $15.0 Million. Its 2012 Net Income is forecast to increase by 8%. The company’s capital structure has been 35% Debt and 65% Equity since 2010‚ and the company plans to maintain this capital structure in 2012. The company paid $3.0 Million cash dividends in 2011. The company is planning to invest in a major capital project in 2012. The capital
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paid cash dividends every year since the company was founded in 1990. The dividends have steadily increased from $0.05 per share to the latest dividend declaration of $1.00 per share. The board of directors is eager to continue this trend despite the fact that earnings fell significantly during the recent quarter as a result of worsening economic conditions and increased competition. The chair of the board proposes a solution. She suggests a 5% stock dividend in lieu of a cash dividend‚ to be accompanied
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Introduction – Company background Dividend payment decisions Policy analysis ◦ Zero dividend payout – pros and cons ◦ 40% or $0.2 per share – pros and cons ◦ Residual-dividend payout – pros and cons Conclusion Founded in 1923 In early days‚ it has designed and manufactured a number of machinery parts‚ including metal presses‚ dies and molds. By 1975‚ it has evolved as innovative producer of industrial machinery and machine tools. In 1980‚ entered in CAD/CAM and established
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Case 19 – Georgia Atlantic Company (Dividend Policy) Critique the 6 alternative dividend policies proposed by Abe Markowitz. Discuss the implications of each for Georgia Atlantic Company. Make your recommendation on which is the best for the shareholders and state the reasons why. Solution No Cash Dividends‚ No Stock Dividend or Split This strategy will be the worst possible choice for Georgia Atlantic. This is due to the fact that the company’s recent Market-to-Book value is well below
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European Journal of Business and Management ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online) Vol 4‚ No.1‚ 2012 www.iiste.org Earning Management and Dividend Policy: Empirical evidence from Pakistani listed companies Jahanzaib Haider (Corresponding author) Bahaudin Zakariya University‚ Multan Sub-Campus‚ Dera Ghazi Khan‚ Pakistan. Tel: 92-331-3312626‚ E-mail: haider_jahanzeb@yahoo.com Akbar Ali Bahaudin Zakariya University‚ Multan‚ Sub-Campus‚ Dera Ghazi Khan‚ Pakistan. Tel: 92-331-7304678‚ E-mail:
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Chapter 11 Owners’ Equity A Overview of Capital Stocks B Sale and Issuance of Common Stock C Treasury Stock D Cash Dividends‚ Stock Dividends‚ and Stock Splits E Preferred Stock 1 McGraw-Hill ACCT2010 A. Authorized‚ Issued‚ and Outstanding Shares Authorized shares are the maximum number of shares of capital stock that can be sold to the public. Issued shares are authorized shares of stock that have been sold. Unissued shares are authorized shares of stock that never have been sold. 2 McGraw-Hill
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Chapter 22: Dividend Policy Multiple Choice Questions 1. When is the ex-dividend date if the holder of record date is April 14‚ 2006? A. April 15 B. April 16 C. April 12 D. April 13 Level of difficulty: Medium Solution: C Ex-dividend date is the second business date before the holder of record date. 2. Which of the following statements about M&M assumptions is false? A. There are no taxes. B. Not all firms maximize value. C. There is no debt. D. Markets are perfect. Level of difficulty:
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MM Hypothesis – A Critique The assumptions of MM hypothesis are unrealistic and untenable in practice. As a result‚ the conclusions that dividend payment and other methods of financing exactly offset each other and hence‚ the irrelevance of dividends‚ is not a practical proposition; it is of merely theoretical relevance. The validity of MM approach is open to question on two counts: 1. Imperfection of Capital market 2. Resolution of uncertainty Market Imperfection MM assume that capital markets
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Murdoch Ltd consists of: 52 000 Ordinary A shares @ $2.50‚ fully paid $130 000 15 000 Ordinary B shares @ $1.50‚ paid to 80c 11 000 On 28 June 2012‚ the directors declared a 7c per share final dividend. Shareholder approval is not required to pay dividends. Required Prepare the journal entries to record the dividend‚ show all workings. (2 marks) 6. Eyre Ltd’s share capital consists of 65 000 ordinary shares of $2.30 each‚ fully paid. On 17 February 2012 the directors offered these shareholders the right
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70‚000 shares issued $700‚000 Preferred shares‚ $3 cumulative‚ 100‚000 shares authorized‚ 5‚000 shares issued $50‚000 Retained earnings $300‚000 All of the Common shares had been issued at one public offering in 2002. The last dividends declared for the common and preferred shares were for the year ended December 31st‚ 2003. The following
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