WeeMart, a retailer of children’s clothes, announces cut in dividends following a year in which both revenues and earnings dropped significantly. How would you expect its stock price to react? Explain.
Answer to relevant QuestionsStock buybacks really do not return cash to stockholders because only those who sell back stock receive the cash. Is this statement true or false? Explain. LimeAde, a large soft drink manufacturing firm, is faced with the decision of how much to pay out as dividends to its stockholders. It expects to have a net income of $1,000 (after depreciation of $500), and it has the ...Cracker Barrel, which operates restaurants and gift stores, is reexamining its policy of paying minimal dividends. In 1995, Cracker Barrel reported net income of $66 million; it had capital expenditures of $150 million in ...Now assume that Lube Oil has a return on equity of 5% and a cost of equity of 10%. As a stockholder in Lube Oil, would you want the firm to change its dividend policy? Why or why not? NCH, which markets cleaning chemicals, insecticides, and other products, paid dividends of $2.00 per share on earnings of $4.00 per share. The book value of equity per share was $40.00, and earnings are expected to grow 5% a ...
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