Scott Hall, vice-president of finance and chief financial officer of Champion Road Machinery Limited, was preparing a presentation on the firm's proposed dividend policy for a board of directors' meeting scheduled for the middle of August.
Nonetheless, earnings were well ahead of those projected in the prospectus and the business had succeeded in handling cash better than expected.
Learning Objective: This case exposes pupils to numerous dividend policy problems. It considers most of the standard factors like projected cash needs, target capital structure and the probability the company would need to seek external equity funding in the future, signalling effect, clientele effect, effect on the cost of the stock, tax effects on stockholder, and the typical dividend yield of the TSE 300 firms and Champion's direct competitors.
Publication Date: 12/08/1995
This is just an excerpt. This case is about Finance
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