The bank is listed in the Australian Stock Exchange and has made a satisfactory performance over time. Financial Policies of Westpac Banking Corporation related to Capital Structure In 2008, Westpac went into a strategic alliance with St. George Bank Limited in a merger operation. In that merger the exchange ratio of St. George Bank Limited to Westpac Bank was 1.31. This means that the valuation of the assets of St George was at a higher level than that of Westpac, and therefore the shareholders of St George have got a better valuation as compared to the shareholders of Westpac. The bank went into a merger policy because it wanted to make more use of its resources and have a better financial health (Rosenbaum and Pearl, 2009, p. 36). This would also help the bank to survive in the long run. At this juncture to retain the positive sentiment of the investors, Westpac announced a special dividend of $ 1.25 per share. This has a positive impact on the prices of the shares and the prices seem to go up; therefore, it is a deliberate step on part of the company to keep a stable position in the securities market. Dividend Payout Policies of Westpac The financial history of the company reveals that dividend has been paid by the company bi-annually in the month of July and at the end of the year, December. The dividend yield for the stock holders had ranged from 0.56 to 0.86. The returns that the shareholders have got by investing in the company is well understood by the dividend yield paid ever time (Gallagher, 2003, p. 194). The mean and the standard deviation of the yield have been calculated. Mean 0.736666667 Standard Deviation 0.108857705 The average yield of the dividend has been 0.736. A dividend payout ratio of 70% per share would encourage the shareholders to invest more money in the stock and to hold the stock for a longer period of time. These dividends are directly transferred to the accounts of the shareholders. The company generally adopts any of the two dividend payout policies- the Dividend Reinvestment Plan (DRP) in which the retained earnings that the company generates are capitalized by the company instead of being distributed (Modigliani and Miller, 1958, p. 282). This is often known as the growth schemes by which the company acquires more assets or uses the money for productive purposes. The second option that the company takes is to distribute the dividends to the shareholders. The shareholders who look forward to short term investments and do not want to engage their money in the long term in the stocks of Westpac would prefer the second option because they would be getting a dividend yield of an average of 70% within 6 months time. For example, in the year 2010, the company paid out dividends at a ratio of 64.9% (Westpac Group, 2012). The share price of Westpac that time was at an average of 23.24. Thus it is lucrative stocks for the investors who would hold the stock for a minimum period of 1 year. Buyback of Shares by Westpac Most of the companies in Australia go for a share buyback for avoiding the risk that any bigger firm may take over the business (Doan, Yap, and Gannon, 2011, p. 69). Westpac followed on the similar line to keep the capital structure fundamentally strong. The company announced the buyback of shares as a strategy for successful management of its finances. The cash profit of the bank from interest income
Corporate Finance Essay Contents Contents 2 Westpac Banking Corporation 3 Financial Policies of Westpac Banking Corporation related to Capital Structure 3 Dividend Payout Policies of Westpac 3 Buyback of Shares by Westpac 4 Capital Structure Decisions 5 References 7 Westpac Banking Corporation Westpac is a first ever financial institution in Australia that provided banking services to the citizens…
Corporate social responsibility (CSR) is an essential facet of the business world in the last eighty years. As early, as the 1930’s idea of the social responsibility of organisations has already been alluded and discussed by some practitioners (Hemingway, 2002).
Enforcing such contracts will involve transaction costs (often referred to as agency costs), and these costs may sometimes be very high indeed.
The more autonomy that agents have to have in order to do their particular kind of work effectively and efficiently, the less useful coercive sanctions are likely to be, and the more important it becomes for agents' moral and material incentives to be appropriately aligned with their broader obligations to their principals.
A lot many efforts were made towards identifying a predictable trading pattern which could be used for chasing profitable deals. From the mid-1950s to the early 1980s, a random walk theory (RWT) of share prices was developed based on the past empirical evidence of randomness in share price movements.
The Company has access to a large inventory of hotel rooms; has developed its own technology, which searches for hotel inventory to be used by travel agents and Internet portals, and owns or has agreements with travel agents for the distribution of its inventory.
However, it is not the only factor. The most important aspect, perhaps, is the close complexity of relations and interdependence between payout policy and major part of the financial and investment decisions the companies make:
Management and the board of directors must decide the level of dividends, what repurchases to make (and the mirror image decision of equity issuance), the amount of financial slack the firm carries (which may be a nontrivial amount; for example, at the end of 1999, Microsoft held over $17b in financial slack), investment in real assets, mergers and acquisitions, and debt issuance.
(Bodie et al., 2005). The CAPM is based on a number of assumptions, which have been attacked by a number of researchers. For example, the CAPM assumes that all investors invest only for a single holding period, which is not the case in practice. In addition, the CAPM assumes that all investors borrow and lend at the risk-free interest rate which is also not feasible in real life.
My recommendations will be made after careful study and analysis of the Chinese market.
China, (People's Republic of China), is situated in eastern Asia, bounded by the Pacific in the east. The third largest country in the world, next to Canada and Russia, it has an area of 9.6 million square kilometres, or one-fifteenth of the world's land mass.
The conversion of the US$ 12,000,000 to GB Pounds for the aggregate value of foreign exchange rate in June 2006 (@ 1 = $1.75) the value of the amount earned in pounds by the company is 6,857,143 approximately. The interest earned for the three-month period between June and October 2006 is estimated at about 1,902,857 (simple interest) totalling to 8760000 earnings to the company.
IHG has been in business for nearly 3 decades and the management believes in steady growth and aims at 8% to 10% annual revenue growth in the long term.
However, the company is now presented with a prospective opportunity to invest in
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