...and 1998, and 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 Directors were to declare dividends of $2.75 per common share. b) Calculate the dividends payable to each class of share and the dividend per common share if the Board of Directors were to declare total dividends of $72,500. 2. At the start of the current year, the shareholders’ equity section of the Balance Sheet of Fluctuation Corp. appeared as follows: Shareholders’ Equity Common shares, 100,000 outstanding $1,125,000 Retained earnings 628,000 $1,753,000 On March 1, 1999, Fluctuation repurchased 4,000 common shares on the stock market at a cost of $36,440. On July 15, 1999, Fluctuation issued 10,000 at the market price of $22 per share. On December 1, 1999, Fluctuation used surplus funds to repurchase an additional 1,000 shares at $20 per share. 6 Required: Prepare the journal entries to record the three share transactions during the year. 3. Selma Inc. has the following shares outstanding at December 31,...
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...- prefer retention of earnings. - other reasons : availability of investment opportunities or need fir cash - if mgmt seeks to maximize wealth of SH : dividend decision depends on who has the better use for the money -- SH or the firm -SH who dont like the dividend policy may sell share and vice versa - if sellers exceed buyers, value of share will fall and mgmt will become aware of the stockholders' preference for the cash dividends instrad of the retention of earnings. CASH DIVIDENDS - Comp that do pay cash dividends usually have a policy that is eithet stated or implicitly known by the investment community. - Payout ratio : ratio if cash dividends to earnings ; cash dividends divided by earnings per share. -if dollar amt of dividend us stable, payout ratio will fluctuate w fluctuation in earnings. -stability un dividends: amt of earnings retained varues each year and that mgmt has decided to maintain a stable dividend at the expense of stable increases in retained earnings. - foreign firms pay cash dividends semi annually/ annually - fluctuations un echange rates imply that the amt of the divident recrived varies w each payment - sometimes pay with extras - appropriate sa cyclical industry bc earnings fluctuate and the firm may be hard pressed to maintain higher level of reg quarterly dividends. -with extras, firm maintains a...
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...convenience stores and online food retail businesses in the United States and Europe. The company started in 1887 with the founding of a small grocery store in Oostzaan, the Netherlands. In the first decades of the twentieth century, Albert Heijn exploited 25 grocery stores, began producing food products and owned production facilities for products like coffee, chocolate and meat. In 1955 the company shifted their format to become a supermarket chain. In the sixties Albert Heijn became the number one company in the Netherlands in this branch. Ahold holding itself was formed in 1973. The aim of the formation of the holding company was for it to become a stock listed company which gave the opportunity to raise extra capital by issuing shares and to start its international expansion. Ahold developed itself into one of the most important food retailers in the world, through a string of acquisitions. Ahold still is among of the market leaders, along with Wal-Mart (USA) and Carrefour (France). Ahold’s core business is retail (particularly supermarkets) and they operate in the food retail and wholesale market. They operate their businesses from two continental platforms: Ahold Europe and Ahold USA, each led by a Chief Operating Officer (COO) reporting to Ahold’s CEO, Dick Boer. The company is an AEX-listed company on Euronext Amsterdam. The headquarters are based in Amsterdam, The Netherlands and they also have Corporate Center Offices located in the United Stated of America and...
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...Chapter 5: 1. Interest rates are quoted on a annual, semi-annual, quarterly, and monthly basis. Interest rates are reported as effective annual rates or annual percentage yield most commonly. Another type of interest rate is known as annual percentage rate. An example of this is Kim is taking out a loan on a house and the annual percentage rate is 4.2%. A different example would be Lisa is taking out a loan on a car and the annual percentage rate is 2.99%. A third example is Travis deposited money into his savings account accumulating interest at a rate of 2.8% semi-annually. 2. Computing loan payments and balances requires that the quoted rates match up with the number of periods. One example is buying something on a credit card. The annual percentage rate for the credit card company is 13.98%. In order to solve for how much interest you have accrued after 5 months. You could first divide the Apt by 12 months in order to convert it to a monthly percentage. Then you would pull up excel and use the payment function. You can also compute the balance of a loan by using excel and the function present value rather than the payment function. 3. Inflation affects our evaluation of interest rates that are given to us from loan agencies or by banks. A higher interest rate represents that the costs to the investment are worth more than the benefits. Higher interest rates are unattractive to those looking for loans. There are also interest rates that allow for money to be borrowed...
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...TUTORIAL 1 BUSINESS PLANNING & FINANCIAL PLANNING 1. Candidate should explain that a stockholder owns part of a company and is entitled to income in the form of dividends. Stockholders also elect directors who run the company. Stakeholders are groups of people who have an interest in how the firm is run. These include stockholders, employees, management, creditors and customers among others. Each group is interested in the firm’s operation and profitability for its own reasons. All stockholders are stakeholders, but not all stakeholders are stockholders. 2. The two common sources of corporate financing are stocks (shares) and bonds. Shareholders are the owner of the firm in which they are entitled to dividend if firms generate profit. Bondholders are creditors to a firm. They receive fixed coupon payment (annually or semi-annually) until maturity of the bond plus principle at maturity. 3. Symmetric Information is a situation in which investors and managers have identical information about firms’ prospects. Asymmetric information is a situation in which managers have different (better) information about firms’ prospects than do investors. 4. The relationship between stockholders and the management is called the agency relationship. This occurs when the shareholders as principals hire their agents to act on their behalf. The possibility of conflicts of interest between them is termed as the agency problem. There are two types of agency costs, the direct costs originating from compensation...
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...“IMPACT OF DIVIDEND ON STOCK PRICES” ABSTRACT The project aims to establish the impact of dividend on market price of a share. This has been done for individual companies in Steel sector. After studying the basic concepts of dividends and dividend policy I am able to get a proper perspective of the requirements of the project and also gain a better understanding of the results obtained. I have looked to find the relation between pre dividend price change and the dividend using regression analysis. Similarly, I have analyzed the relation between the post dividend price change and the dividend. It is a matter of fact that dividends are declared by a company primarily to generate capital and also at certain times to maintain the market sentiment. It is in the best interests of the company to maximize the market value of its share and companies use dividend as a tool to maintain their corporate image. However, the degree of correlation between the dividend and the market price is low which implies that several other internal and external factors affect the market value of shares. To gain a holistic picture, I also did a comparative study of two peers in a sector (steel)to better understand how the specific requirements of each sector also impact the dividend policy of a company. The conclusions derived from the analysis performed further consolidated theoretical knowledge and deviations were better understood. SYNOPSIS “Impact of...
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...Ltd Abstract This paper intends to research into the chosen company-- Kweichow Moutai Co., Ltd about its characteristics which entitle it to be the leading firm in the white spirit industry within China. Based its general conditions, this paper mainly focus on its capital structure with very leverage ratio and very high liquidity ratio of debt and asset, as well as its payout policy which returns relatively small amount of cash back to the investors. Simultaneously we also take the interest conflicts and the competitive scenario with other rivals into consideration. It can be concluded that the financial response of its leverage level and dividend policy is not significant. While the major suggestions given from this paper contend that it should raise more debt when faced with worthwhile investing projects and should increase the dividend ratio for the feedback of its investors, which can also reduce its excess cash at hand. Key words: Kweichow Moutai Co., Ltd, Capital Structure, Payout Policy 1. Introduction 1.1 Company introduction Kweichow Moutai Co., Ltd. is mainly engaged in the manufacture and distribution of Maotai liquor series products. The Company’s main products portfolio consists of Maotai liquors and other liquor series. It distributes its products in domestic and overseas markets. The Company is also involved in the manufacture and distribution of drinks and food packaging materials, the development of anti-counterfeit technology, as well as the research...
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...PAGE SHARES AS A FORM OF FINANCING COMPANY BUSINESS A TERM PAPER ON COMPANY LAW (ACCT 718) AHMED II ABDULWAHAB HASSAN PGDAF/ADM/2011/2012/693 POST GRADUATE DIPLOMA IN ACOUNTING AND FINANCE DEPARTMENT OF ACCOUNTING AND FINANCE AHMADU BELLO UNIVERSITY, ZARIA AUGUST, 2012 INTRODUCTION A unit of ownership interest in a corporation or financial asset. While owning shares in a business does not mean that the shareholder has direct control over the business’s day-to-day operations, being a shareholder does entitle the possessor to an equal distribution in any profits, if any are declared in the form of dividends. Shares in a company represent ownership. This means when an individual buys shares in a company, they become one of the owners of the business. This entitles them to a share of the distributable profits of the company - the dividends. DEFINITION OF SHARE A share is a single unit of ownership in a corporation, mutual fund, or any other organization. A joint stock company divides its capital into shares, which are offered for sale to raise capital, termed as issuing shares. Thus, a share is an indivisible unit of capital, expressing the proprietary relationship between the company and the shareholder. The denominated value of a share is its face value: the total capital of a company is divided into number of shares. Types of Shares There are four main types of shares 1. Equity Shares These shares are also...
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...valuation of Coca Cola, its current stock price, and whether Coca Cola has the potential to be a good recommendation for clients to add to their portfolios. The analysis herein takes into account historical Coca Cola financial information, and uses the information to ascertain whether or not Coca Cola, at its current stock price of $58.00 a share, is a viable security for investors to add to their portfolios. Methodologies The completed analysis of Coca Cola’s investment potential required the use of a few calculations to gather enough information regarding the selling price of its stock. The first of these calculations used is the Capital Asset Pricing Model (Exhibit 1). This model was used to calculate the required rate of return for an investor in Coca Cola. In this calculation, Beta was set at 1.24, and the risk free rate was set at the 30-year government bond rate of 6.22%. The market risk premium was set at the stated 6.00% rate, resulting in a required rate of return of 13.66%. Once this required rate of return was calculated, the Dividend Discount Model (Exhibit 2) was used to calculate a forecasted 1997 stock price for Coca Cola. Using the required rate of return of 13.66%, a forecasted dividend of $0.62, and the expected constant dividend growth rate of 12% for this calculation, the model has forecasted a 1997 stock price of $37.35. For this analysis, a P/E ratio calculation (Exhibit 3) was used to estimate the Coca Cola stock price. To calculate this, it was stated...
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...Business report for Sky City Entertainment Group Limited and tourism industry. Contents Introduction 3 Discussion of findings 3 Industry background 3 Investigation of Financial information 5 Accounting elements 5 Ratios analysis 6 Profitability and Efficiency Ratios 6 Financial Stability Ratios 7 Financial Structure Ratios 7 Investment Ratios 8 Share Market Data 8 Brokers Recommendation 8 Share performance 9 Conclusion: 9 Recommendations 9 Reference List: 10 Appendix 11 Introduction The purpose of investigating the Sky City Group Limited (SKC) and tourism industry is to give a financial advice to a client who has recently asked for it in Vision Consultancy Limited. The sources of information and data used are reliable as it was retrieved from trustworthy websites such as: company’s website, Statistics NZ, NZX company research, tourism industry association New Zealand and Investorwords. The limitations of this business report are that financial statements of SKC used are for previous business year. And SKC does not disclose inventory turnover figure, consequently this ratio cannot be calculated. Also, there might be an increase in tourism after the Hobbit movie is released. Discussion of findings Industry background According to Tourism Industry Association New Zealand (2012), tourism is a fundamental contribution to New Zealand’s economy and way of life. It contributes close to 10% of gross domestic product (GDP), the earning for...
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...consistent and predictable economic progress is important. Therefore, national macroeconomic and monetary policies which produce stability and consistency in GDP per capita growth are generally very significant factors affecting the level of automotive sales and production. The following are the macroeconomic factors found to encourage automotive production and sales: (a) Stable national economic performance. Producers need confidence to invest, and consumers and businesses need confidence in their future to purchase vehicle(s). They therefore all want to minimize uncertainty. Thus, wild fluctuations in economic activity should be avoided. (b) Consistent national economic and regulatory policies. Likewise consistent national policies are critical to investment and consumer behaviour. Inconsistent policies may inhibit investment and sales as well as generate potentially large fluctuations in economic performance. (c) Transparent economic and regulatory policies. Policies must be not only fair, but must be seen to be fair if external investment is to be encouraged. Thus great emphasis should be given to ways of maximising transparency. Simplicity of policies and regulations should be encouraged. (d) Commitment by the government to the auto sector. Automotive investment requires large amounts of capital, which must be committed for a long period. Investors want to minimise the associate risks, so they want clear evidence that...
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...[pic] TERM PAPER ON INVESTMENT THEORY Submitted To Rafiqul Matin Course Instructor Investment Theory East West University Submitted By A. K. M. Mamunur Rashid ID # 2011-2-90-005 Md.Reza-E- Mostafa ID # 2011-3-90-010 Md. Rakibul Islam ID # 2011-1-90-011 Sabiqun Nahar ID # 2011-1-90-005 Date of Submission: 11th December, 2012 LETTER OF TRANSMITTAL December 11, 2012 Md. Rafiqul Matin Course Instructor Investment Theory East West University Dear sir, The term paper writing in the assigned topic by you is a part if the course, Investment Theory to judge our understanding. In response to that our group prepared this report. As you will see this report tries to find out the term paper on the of the analysis of Investment Theory & Market Investment you asked us to conduct. Our study reveals some specific trends of how DSE basically operates it’s functions. Based on annual report and website of DSE, we have tried to find out the security trade functionality of 10 individual stocks regarding different category & sectors. According to it’s process, It will help you to understand the prevailing perception of how the securities are traded considering all factors & what steps DSE usually takes to maintain the whole trade functions. Thanks for giving us the opportunity to work on this report. It’s been a real education for us. If you have any question to ask us, please...
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...Accounting analysis By strictly complying with the AASB and relevant legislations, the financial reports of the SUL present a true and fair view of the underlying business reality of the company. The significant decrease of the net debt during the 2009/10 financial year, as emphasized in the Chairman’s report, was largely driven by the reduction of short-term cash advances (Super Cheap Auto Group Limited, 2010, p.3). To the group, cash advances have been drawn as a source of short-term financing on a needs basis. Therefore, they are likely to be part of the working capital of the group which must be recognized as current liability under AASB101. In this light, the flexibility for understating this liability is clearly limited. In addition, there are certainly more flexibility in the recognition of provision for impairment of receivables which is governed by AASB 137. The recognition involves the estimation of the possibility that the sub-tenants and wholesalers won’t be able to repay the receivables. Due to unexpected difficult economic situations in, $947,000 receivables were written off (Super Cheap Auto Group Limited, 2010, p.54). On the other hand, the group did have an accounting choice of not impairing another part of the trade receivables ($3,009,000) which were past due (Super Cheap Auto Group Limited, 2010, p.54). Moreover, other critical accounting estimates and judgements include the impairment of goodwill and the value of intangible assets relating to acquisitions...
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...of each stock versus their competitors 5 BMO 5 Husky Energy 6 Rogers 7 BlackBerry 8 Google 9 Why each stock in the portfolio increased or decreased in price 10 BMO 10 Husky Energy 10 Rogers Communication 10 BlackBerry Limited 11 Google 11 Final value of each stock and compare to your original cost per share. Holding period return 11 BMO 11 Husky Energy 12 Rogers Communications Inc. 12 BlackBerry Ltd 13 Google 13 Weekly price table and a graph for each. 14 BMO 14 Husky Energy 14 Rogers Communications 14 Total return for group’s portfolio. 16 Bibliography 18 Portfolio Portfolio as date of purchase of February 5th, 2015 Company Name | Stock Symbol | # of Shares | Exchange Rate | Price | Price in CDN | Commission | Total Cost | Bank of Montreal | BMO.TO | 259 | 1 | $76.91 | $76.91 | $20.00 | $19,939.69 | Husky Energy | HSE.TO | 710 | 1 | $28.13 | $28.13 | $20.00 | $19,992.30 | Rogers Communication Ltd | RCI-B.TO | 444 | 1 | $45.00 | $45.00 | $20.00 | $20,000.00 | BlackBerry | BB.TO | 1595 | 1 | $12.52 | $12.52 | $20.00 | $19,989.40 | Google | GOOG.Q | 47 | 0.80 | $527.58 | $422.06 | $20.00 | $19,857.01 | | | | | | | | | Portfolio Total | | | | | | | $99,778.40 | Date of sale of portfolio as of April 2nd, 2015 Company Name | Stock Symbol | # of Shares | Exchange Rate | Price | Price in CDN | Commission | Total Cost | Bank of Montreal | BMO.TO | 259 | 1 | $76.40 | $76.40 | $20.00 | $19,807.60 | Husky Energy | HSE.TO | 710 | 1 | $26.62...
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...different exchange than its primary and original stock exchange. For a company to be cross-listed, it must meet the requirements of all the exchanges its shares trade on. Cross listings provide companies with more liquidity and a greater ability to raise capital. A Dual Listed Company (DLC) is a corporate structure in which two corporations function as a single operating business through a legal equalization arrangement, but retain separate legal identities and stock exchange listings. Almost all DLCs are cross-border, and have tax advantages for the corporations and their shareholders. Royal Dutch and Shell used to be a DLC until 2004 with listings on nine exchanges across Europe and the United States. While Royal Dutch traded primarily in the U.S. and the Netherlands, Shell traded predominantly in the U.K. In the U.S., Shell shares traded as American Depository Receipts (ADRs). An ADR is a negotiable certificate issued by a U.S. bank representing a specified number of shares in a foreign stock that is traded on a U.S. exchange. An ADR allows you to own shares of a foreign company while realizing any dividends and capital gains in U.S. dollars. It is now a single entity with primary listing on the London Stock Exchange and secondary listings on Euronext Amsterdam and the New York Stock Exchange. 2. Why do you think the prices of RD and Shell deviate from the 60/40 split, and why does this deviation change over time? The corporate structure of Royal Dutch and Shell mandated...
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