Discussion week 5

Discussion week 5 - technology companies like Apple with...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Paying cash dividends to shareholders could be considered both good and bad depending on the stage of development the company is at the moment of the decision and the type of company in question. From the perspective of a senior business executive of a growing company during the early stages I would prefer to reinvest the free cash flow in the same company. It is not an uncommon practice and many shareholders are aware that in order for the stock value to grow the company must be equipped with as many tools as possible to aid on its development. FCF being reinvested provides the company with said tools. This case is most evident in
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: technology companies like Apple with very good results. On the other hand, if the company has reached a stage where it has been concluded that we can consistently make cash dividend payments then we would have reached one of our main goals as a company which is to maximize stockholders wealth. Under those circumstances I would consider paying cash dividends a good decision. References: Brigham, E. F., & Ehrhardt, M. C. (2011). Financial management: Theory and practice (13th ed.). Mason, OH: South-Western....
View Full Document

Ask a homework question - tutors are online