Describe how irregular income items, such as discontinued operations and extraordinary items, are presented in the income statement; compute earnings per share; distinguish between basic and diluted earnings per share; account for cash dividends and stock dividends, and explain the effects of these transactions on a company's financial statements;...
Finance practitioners and academics are, or should
be, interested in the following questions:
.Why do investors like dividends?
.Why do investors hate to realize losses?
.Why do investors prefer stocks of "good"
.How are expected returns determined?
.What kjnds of securities do investors like?
.What are the forces that shape financial regulations?
Chapter 17 cover a variety of topics related to dividends and corporate payout policies. After studying this chapter, you should understand: Dividend types and how dividends are paid, the issues surrounding dividend policy decisions, the difference between cash and stock dividends, why share repurchases are an alternative to dividends.
Chapter 14 introduces you to dividends and dividend policy. In this chapter, you will: Understand dividend types and how they are paid, understand the issues surrounding dividend policy decisions, understand the difference between cash and share dividends, understand why share repurchases are an alternative to dividends.
In this chapter, we assume that the appropriate measure of future equity cash flows is dividends. We will use dividend discount models (DDMs) and the discount rates discussed in Chapter 2 to determine the common stock value. The topics discussed in this chapter are: An overview of present value models, the general form of the DDM, the Gordon growth model, multistage dividend discount models, and the determinants of dividend growth rates.
In chapter 3, we used dividends as the measure of shareholder cash flow in stock valuation. In chapter 4, we will utilize free cash flow. Whereas dividends are the cash flow actually paid to shareholders, free cash flow (FCF) is the cash flow available to shareholders.
Dividend discount model (DDM) A model for valuing the common stock of a company, based on the present value of the expected cash flows.
Dividend growth model A model wherein dividends are assumed to be at a constant rate in perpetuity. Dividend limitation A bond covenant that restricts in some way the firm's ability to pay cash dividends. Dividend payout ratio Percentage of earnings paid out as dividends. Dividends per share Amount of cash paid to shareholders expressed as dollars per share. Dividend policy An established guide for the firm to determine the amount of money it will pay as...
This free book of Exercises reinforces theoretical applications of stock market analyses as a guide to Corporate Valuation
and Takeover and other texts in the bookboon series by Robert Alan Hill. The volatility of global markets and individual
shares, created by serial financial crises, economic recession and political instability means that investors (private,
institutional, or corporate) cannot rely on “number crunching”.
Instruments used to predict future mutual fund returns include the aggregate dividend
yield, the default spread, the term spread, and the yield on the three-month T-bill, variables
identiﬁed by Keim and Stambaugh (1986) and Fama and French (1989) as important in
predicting U.S. equity returns. The dividend yield is the total cash dividends on the value-
weighted CRSP index over the previous 12 months divided by the current level of the
index. The default spread is the yield differential between Moodys BAA-rated and AAA-
Cổ tức trả bằng tiền mặt (cash dividends) gồm 4 loại cơ bản: • Cổ tức trả bằng tiền thông thường: Cổ tức được công ty trả cho cổ đông trong kỳ hoạt động kinh doanh thông thường và được trả thường xuyên (2 -4 lần một năm) •Cổ tức thưởng: Cổ tức trả thêm ngoài cổ tức thông thường và không thường xuyên • Cổ tức đặ biệ Cổ tức chỉ trả một lầ ứ đặc biệt: ứ hỉ ả ộ lần •Cổ tức thanh lý: Cổ tức trả cho cổ đông được trích từ các ...
Acres of Diamonds have been spread all over the United States, time and care have made them more valuable, and now that they have been reset in black and white by their discoverer, they are to be laid in the hands of a multitude for their enrichment. In the same case with these gems there is a fascinating story of the Master Jeweler’s life-work which splendidly illustrates the ultimate unit of power by showing what one man can do in one day and what one life is worth to the world.
In earlier book chapters, it was noted that the accounting profession uses an “all inclusive” approach
to measuring income. Virtually all transactions, other than shareholder related transactions like
issuing stock and paying dividends, are eventually channeled through the income statement.
However, there are certain situations where the accounting rules have evolved in sophistication to
provide special disclosures.
Conwell Acres of Diamonds have been spread all over the
United States, time and care have made them more valuable, and now that they
have been reset in black and white by their discoverer, they are to be laid in the
hands of a multitude for their enrichment.
In the same case with these gems there is a fascinating story of the Master Jeweler’s
life-work which splendidly illustrates the ultimate unit of power by showing
what one man can do in one day and what one life is worth to the world.
Chapter 6 - Dividends and share repurchases: Basics. This chapter describe regular cash dividends, extra dividends, stock dividends, stock splits, and reverse stock splits, including their expected effect on a shareholder’s wealth and a company’s financial ratios.
Appendix D - Appendix D. After reading the material in this chapter, you should be able to: Explain why companies invest in other companies, account for investments in equity securities when the investor has insignificant influence, account for investments in equity securities when the investor has significant influence, account for investments in equity securities when the investor has controlling influence, account for investments in debt securities.
Chapter 10 - Stockholders ’equity. After studying this chapter you will be able to understand: Identify the advantages and disadvantages of the corporate form of ownership, record the issuance of common stock, contrast preferred stock with common stock and bonds payable, account for treasury stock, describe retained earnings and record cash dividends,…
Chapter 21 - Corporate earnings and capital transactions. After reading this chapter, you should be able to: Estimate the federal corporate income tax and prepare related journal entries, complete a worksheet for a corporation, record corporate adjusting and closing entries, prepare an income statement for a corporation, record the declaration and payment of cash dividends, record the declaration and issuance of stock dividends, record stock splits,...
The chapter focuses on the expansion of corporate capital through the issuance of shares and the contraction caused by the retirement of shares or the purchase of treasury shares and concludes with a discussion of cash dividends, property dividends, stock dividends, and stock splits.
In general, the intrinsic value of an asset = the present value of the stream of expected cash flows discounted at an appropriate required rate of return.
it’s like common stock - no fixed maturity.
technically, it’s part of equity capital.
it’s like debt - preferred dividends are fixed.
missing a preferred dividend does not constitute default, but preferred dividends are cumulative.
CHAPTER 6 Common Stock Valuation
A fundamental assertion of finance holds that a security’s value is based on the present value of its future cash flows. Accordingly, common stock valuation attempts the difficult task of predicting the future. Consider that the average dividend yield for large-company stocks is about 2 percent.