Squeeze Co is currently deciding on the level and form of its next dividend.It is considering three
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Question:
Squeeze Co is currently deciding on the level and form of its next dividend.It is considering three
options:
i. A cash dividend payment of 15p per share
ii. A 5% scrip dividend
iii. A repurchase of 15 % of ordinary share capital at the current market price
Extracts form the company's financial statements are given below
mm
Operating profit24.5
Taxation7.8
Distributable earnings16.7
Non-current assets75
Current Assets
Trade receivables27
Inventory24
Cash4697
Total Assets172
Equity Finance
Ordinary Shares (50p)26
Reserves108134
Current Liabilities38
Total liabilities172
a) If the current cum dividend share price is 432p, calculate the
effect of the three options on the wealth of a shareholder owning
1250 shares in Squeeze Co.
Posted Date: