Framework - considerations raised You can use an organizing...

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1. Discussion following this question should address the nature of the industry, the strategy of the firm, and the firm’s performance. This discussion will lay the groundwork for the review of strategic considerations that bears on the dividend decision. 2. The dividend-payout announcement may affect stock price and that at least some stockholders prefer dividends. 3. The discussion must present the repercussions of a share repurchase decision on the share price, as well as on the dividend question. Signaling and clientele considerations must also be considered. 4. Setting policy within a financing constraint, signaling the directors’ outlook, and generally, positioning the firm’s shares in the equity market. 5. You must synthesize a course of action from the many facts and
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Unformatted text preview: considerations raised. You can use an organizing framework called FRICTO (flexibility, risk, income, control, timing, and other) on the dividend and share repurchase issues. The image advertising and name change issue will be recognized as another manifestation of the firm’s positioning in the capital markets, and the need to give effective signals. 6. Asset change = New debt + (Profits − Dividends) 7. the self-sustainable growth model: gss = (P/S × S/A × A/E)(1 − DPO) Where: gss is the self-sustainable growth rate P is net income S is sales A is assets E is equity DPO is the dividend-payout ratio This model describes the rate at which a firm can grow if it issues no new shares of common stock....
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