FNCE 100 Ch. 18 - Stock split increases the number of...

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Companies devote 40% of net income to share repurchases Dividends and repurchases must be seen as alternative payouts competing for corporate cash flows First four sections – Practial aspects of div and share repurchases Irrelevance of any payout policy in perfect cap. Markets Personal taxes where advantage of repurchases ovcer dividens Dividend – Cash distribution of earnings Use “distribution” if payout is made from other than retained earnings Co. normally pay regular cash dividends four times a year Paying a cash dividend reduces the cash and RE shown in the balance sheet, except in the case of liquidating dividend where APIC is reduced. Another type is paid out in shares of stock or a stock dividend
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Unformatted text preview: Stock split increases the number of shares outstanding Standard Method of Cash Dividend Payment Decision to pay dividned in hands of board of directors 1. Declaration date: Board of directors declares payment of dividends (JAN. 15) Becomes a liability of the firm 2. Record Date: The declared dividends are distibutablew to shareholders of (JAN. 30) record on a specific date. 3. Ex-dividend Date: Share of stock becomes ex-dividend on the date the seller is (JAN. 28) entitle to keep the dividend Shares are traded exdivicdend on and after the second business day before the record date 4. Payment Date: The dividend checks are mailed to shareholders of record (FEB. 16)...
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