Distributions to Shareholders When should cash be distributed to shareholders as opposed to staying in the firm What is a stock repurchase program and when it is wise to use them Explain the pros and cons of repurchases Why are non dividend paying firms reluctant to start paying a dividend Why do firms continue to pay and even raise dividends when earnings are low What is the clientele effect Why are dividends said to have information content Explain the residual dividend model Why is it almost never used strictly Capital Structure Decisions Explain business risk and financial risk What are some of the main contributors to business risk What causes financial risk What is operating leverage What is positive financial leverage Explain signaling theory as it relates to the use of stock and debt Why is it a good idea to have reserve borrowing capacity How does the use of debt constrain managers and reduce agency costs Explain the rationale for a firm going from private to public Explain the IPO process from beginning to end Why would a firm choose to go from public to private Would you expect a highly leveraged private firm to be more or less efficient than a less leveraged public firm Explain Explain the major types of leases operating, financial, sale and leaseback, synthetic Explain the tax effects of leasing from the lessees standpoint Explain how to calculate the NAV What makes leases attractive to a lessor Understand the differences for real estate leases and vehicle leases Explain why tax law is such a big determinant of leasing attractiveness What are some valid reasons for leasing What is a warrant and when are they commonly used What is a convertible and when are they commonly used What are the major things I would need to know about both warrants and convertibles What is an exchange rate As an exporter, would you want your home countrys currency to be strong or weak Explain What economic factors cause a countrys currency to be strong relative to other currencies

Question: Distributions to Shareholders When should cash be distributed to shareholders as opposed to staying in the firm? What is a stock repurchase program and when

Distributions to Shareholders

When should cash be distributed to shareholders as opposed to staying in the firm?
What is a stock repurchase program and when it is wise to use them?
Explain the pros and cons of repurchases.
Why are non-dividend paying firms reluctant to start paying a dividend?
Why do firms continue to pay and even raise dividends when earnings are low?
What is the clientele effect?
Why are dividends said to have information content?
Explain the residual dividend model? Why is it almost never used strictly?

Capital Structure Decisions

Explain business risk and financial risk.
What are some of the main contributors to business risk?
What causes financial risk?
What is operating leverage?
What is positive financial leverage?
Explain signaling theory as it relates to the use of stock and debt.
Why is it a good idea to have reserve borrowing capacity?
How does the use of debt constrain managers and reduce agency costs?
Explain the rationale for a firm going from private to public.
Explain the IPO process from beginning to end.
Why would a firm choose to go from public to private?
Would you expect a highly leveraged private firm to be more or less efficient than a less leveraged public firm? Explain.
Explain the major types of leases: operating, financial, sale-and-leaseback, synthetic.
Explain the tax effects of leasing from the lessees standpoint.
Explain how to calculate the NAV.
What makes leases attractive to a lessor?
Understand the differences for real estate leases and vehicle leases.
Explain why tax law is such a big determinant of leasing attractiveness.
What are some valid reasons for leasing?
What is a warrant and when are they commonly used?
What is a convertible and when are they commonly used?
What are the major things I would need to know about both warrants and convertibles?
What is an exchange rate?
As an exporter, would you want your home country’s currency to be strong or weak? Explain.
What economic factors cause a country’s currency to be strong relative to other currencies?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

1 There are a few key considerations that come into play when deciding whether or not to distribute cash to shareholders One key consideration is the opportunity cost of holding onto the cash which in... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related General Management Questions!

A wood beam AB on simple supports with span length equal to 10 ft is subjected to a uniform load of intensity 125 lb/ft acting along the entire length of the beam, a concentrated load of magnitude...

Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...

The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...

Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...

What are business risk and financial risk? How does each of them influence the firms capital structure decisions?

If a company is thinking about distributing excess cash through a stock repurchase program in lieu of continuing to pay regular cash dividends, what are some factors it should consider before making...

Assume that you recently received your MBA and now work as assistant to the CFO of a relatively large corporation. Your boss has asked you to prepare a financial forecast for the coming year, using...

Microsoft has undoubtedly been the most successful software firm ever. Between 1994 and 2000, the firm's revenues increased from $2.8 billion to $23.0 billion, and its earnings from $ 708 million to...

How does asymmetric information affect the firms capital structure decisions? How do the firms financing actions give investors signals that reflect managements view of stock value?

What sources of capital should be included when you estimate Harry Davis weighted average cost of capital (WACC)? MINI CASE During the last few years, Harry Davis Industries has been too constrained...

The Marietta Corporation, a large manufacturer of mufflers, tailpipes, and shock absorbers, is currently carrying out its financial planning for next year. In about two weeks, at the next meeting of...

Give an alternative solution to Example 3 by letting y = sinh1 x and then using Exercise 9 and Example 1(a) with replaced by y.

Your firm is considering an investment that will cost $750,000 today. The investment will produce cash flows of $250,000 in year 1, $300,000 in years 2-3-4 ,and $1,000 in year 5. What is the...

Calcula By the definition Orit Follow the Pattern given by the documents provided to find the derivative of the following. Be sure to show the definition being followed, if you show the shortcut...

You are trying to decide whether to trade in your ink-jet printer for a more recent model. Your usage pattern will remain unchanged, but the old and new printers use different ink cartridges. Are the...

You are trying to decide whether to trade in your inkjet printer for a more recent model. Your usage pattern will remain unchanged, but the old and new printers use different ink cartridges. Indicate...

You are trying to decide whether to trade in your inkjet printer for a more recent model. Your usage pattern will remain unchanged, but the old and new printers use different ink cartridges....

Task time estimates for a production line setup project at Robert Klassens Ontario factory are as follows: (a) Draw the project network using AON. (b) Identify the critical path. (c) What is the...

Hunt Taxidermy, Inc., is concerned about the taxes paid by the company in 2015. In addition to $42.4 million of taxable income, the firm received $2,975,000 of interest on state-issued bonds and...

Let f (x) = (x 2)(x 3)(x 4). One applied bisection method to the function above with [a0, b0] = [2.5, 4.5]. Determine to which zero of f the method converges Solution. Let us perform the first step...

With stock repurchase, share value will increase, all other things remaining the same, and this will benefit the option holder. To the extent a CEO and others in top management strongly influence the...

can someone help me do the IRAC for this topic Dodge v. Ford Motor Co. 170 N.W. 668 (Mich. 1919) below is attached the chapter and the entire case. 513/23, 11:05 AM Distributions to Shareholders...

Case Questions: Be Our Guest, Inc. 1. A. Reformat the income statement to clearly indicate EBITDA and EBIT. B. See footnote A Exhibit 3. Remove from "Other General and Administrative Expenses the...

10 - There are 6 questions that relate to this scenario: On January 1 of the current year, Tobin Corporation has accumulated E&P of $188,000. Current E&P for the year is $564,000, earned evenly...

Enter the amounts in the table below. Enter gains as positive values and losses as positive values. If the amount is zero, enter a zero (0). A B C D 1 Gain (Loss) Recognized Post-Distribution Stock...

6. Dividends, repurchases, and firm value Remember that the primary goal of a firm is to maximize shareholder wealth by increasing the firm's intrinsic value, It is thus important to unders the...