Working Management and Dividend Policy - Assignment Example

Only on StudentShare

Extract of sample
Working Management and Dividend Policy

The two most significant theories dealing with this subject, as explained by Brealey and Myers, are that of Miller and Modigliani (MM), and the traditionalist view. According to the theory proposed by MM, the capital structure of the firm has no relevance to determining the value of the firm. So, they opine that there is no difference in the value of stock between geared and ungeared firms. Gearing does not affect the value of a firm, whether positively or negatively. The payment of dividend also is not necessarily required to be done on a regular basis, since it does not have any effect on the value of the share price. MM have proved that capital structure can be irrelevant even when debt is risky. (Brealey and Myers 469) Thus, MM propose that financial leverage or gearing does not affect shareholders wealth. And secondly, that the rate of return on shares increases as the firm's debt-equity ratio increases (pp. 473). But, this increase is exactly offset by increased risk and hence, the required rate of return, which nullifies the increase in returns.
A "traditionalist" view has emerged in response to MM's proposals regarding geared equity. The traditionalists believe that personal borrowing is more expensive, risky and inconvenient to investors, so they are willing to pay a premium for shares in moderately geared firms. ...Show more

Summary

Carnival Corporation & plc is a global cruise company and one of the largest travel and leisure companies in the world. It figures in both S&P 500 and FTSE100 companies. Its operations are spread all over North America, South America, Europe, and Australia…
Author : eleanore44
Working Management and Dividend Policy essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the assignment on your topic
"Working Management and Dividend Policy"
with a personal 20% discount.
Grab the best paper

Related Essays

Finance and Growth Strategies
This research paper examines the main practical considerations which are likely to influence a firm’s capital structure. The report will cover the following: management attitude; asset structure; debt tax shield; profitability of the firm; projected growth rate of the firm; the size of the firm; inflation and general economic conditions; control and business risk.
11 pages (2750 words) Assignment
Financial management
ales out) are 365/4.21 = 87days Payables = purchases divide payables = 378000/129000 =2.93 Therefore number of days to clear payables (Day payables out) are 365/2.93 = 124days Inventories= cost of goods sold divide inventories = 1018000/332600 =3.06 Therefore number of days to clear inventory (Day inventory out) are 365/3.06 = 119days Cash conversion cycles equals = Day sales out + Day inventory out - Day payables out = 87+119-124 = 82days Concerns: Work in progress may lead to more days for clearing the work cycle at higher rates than 70% The working capital cycles has a difference of 8days hence the company should review the discrepancies and do necessary corrections.
4 pages (1000 words) Assignment
Business Policy and Strategic Management
Summarization of its strengths and weaknesses are as follows: Strengths Its biggest strength is its emphasis on its workforce. The culture at Southwest fosters informality and warm working relationships which enable its employees to come out with innovation, creativity and multitasking.
2 pages (500 words) Assignment
Financy Policy Assignment
The Market value of a firm is its ­­value in the market. Market value refers to a price which the seller of a firm is bound to receive from a buyer which is inclusive of both the firm’s assets and liabilities that the firm intends to acquire or sell. It is very important to assess the market value of a firm especially when there is a merger or acquisition.
6 pages (1500 words) Assignment
Comparison between EDF group (lectricit de France) and E.ON S E from an investor's perspective point of view
This report entails a detailed analysis on 2 companies EDF Groups and E.ON SE. Both of these are key players globally in the energy business and are large multinationals. The analysis includes a discussion on CAPM (along with its assumptions, mainly efficient market hypothesis theory) and a financial ratio analysis.
16 pages (4000 words) Assignment
Valuation of Securities and Cost of Capital
A company's assets can be valued with the help of the calculation of net assets. The net assets of Tesco plc and Sainsbury plc are 14,877m and 7,937m respectively. However, the problem in valuing a company's assets with the help of net asset calculation is that these values obtained from the both the companies' balance sheet for the year ended 2005 are based on the book values.
16 pages (4000 words) Assignment
Finance Policy
The market value of a firm is dependent upon the capital structure of the company. The firm Gibson ltd is equity financed, therefore, the beta of assets as well as of equity is the same. The
6 pages (1500 words) Assignment
Working Capital
Every organization irrespective of its size and nature of the business in which it is operating requires necessary amount of working capital. Efficient maintenance of working capital is important for creating value for
2 pages (500 words) Assignment
Week 9 Question 1 Working Capital Management
This is by offering businesses the ability to calculate the safety stock inventory. This in turn, ensures that businesses have the correct amount of inventory at the right place. These technologies ensure that there is working capital optimization (Partridge,
1 pages (250 words) Assignment
Strategic Management and Transport Policy Critical Review
From the analysis, it is evident that modernization and sustainability aid in the achievement of efficient, timesaving, and economical transport systems that are beneficial in meeting public needs. Politicians play an integral
8 pages (2000 words) Assignment
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT