This preview shows page 1. Sign up to view the full content.
Unformatted text preview: means that the company is not planning to expand itself. The company only retains a small portion of its earnings which may denote a slow growing company or a non-expanding company. A company’s dividend payout ratio may be lower, but it may indicate that the company plans to expand itself and to grow at a higher rate. If the company grows at a higher rate, it is good for the investors ultimately, in the long-run. The investors can then attain higher capital gains on their investment. The company’s aim should be to maximize the wealth of the shareholders. Therefore, a good valuation technique should not only concentrate on dividend payouts, but to take into account the company’s cash flows and its forecast, performance and profitability, market share and future expansion potentials....
View Full Document
This note was uploaded on 09/08/2011 for the course ACCOUNTING 101 taught by Professor Bayne during the Winter '10 term at Berkeley.
- Winter '10