Exam 14: Dividends and Dividend Policy

Miller's Hardware recently paid $1.21 per share in dividends.The company currently has excess cash and would like to distribute an additional $.35 a share to its shareholders.However, the company is concerned about increasing the dividend by that amount as it will not be able to afford a similar increase in the future and doesn't want to lower the dividend once it has been raised.Which one of the following is probably the best suggestion for distributing the $.35 per share?

Harmerlin Enterprises has common stock outstanding at a market price of $72 per share.The total market value of the firm is $9,000,000.The firm plans on liquidating one of its divisions for $900,000 in cash, after taxes, and distributing the proceeds to the shareholders in the form of a liquidating dividend.What will be the amount per share of that dividend?

Which one of the following increases the number of shares outstanding but does not change a firm's equity account values?

Dunder Imports has common stock outstanding at a market price of $57 per share.The total market value of the firm is $5,130,000.The firm plans on liquidating one of its divisions for $500,000 in cash, after taxes, and distributing the proceeds to the shareholders in the form of a liquidating dividend.What will be the amount per share of that dividend?

Which one of the following is a payment by a firm to its shareholders from any source other than current or accumulated retained earnings?

Which one of the following is the date on which the board of directors agrees to pay a dividend and passes a resolution to do so?

This morning, Structural Steel purchased 3,500 of its outstanding shares in the open market.What type of transaction was this?

Which one of the following statements is correct concerning the taxation of dividends and capital gains?

Water Front Rentals has 20,000 shares of stock outstanding at a market price of $24 each and earnings per share of $1.84.The firm has decided to repurchase $75,000 worth of stock.What will the PE ratio be after the repurchase, all else held constant?

Which one of the following is a payment of either cash or shares of stock that is paid out of earnings to a firm's shareholders?

Which statement is correct?

Metal Fabricators recently sold its poorest performing division and realized net proceeds from the transaction of $1.63 million.The firm has 320,000 shares of stock outstanding and a market price of $49 a share.The firm is now preparing to distribute the entire sale proceeds in the form of a liquidating dividend.What is the best estimate of the ex-dividend stock price? Ignore taxes and market imperfections.

Which one of the following reduces the number of shares outstanding but does not decrease the value of owners' equity?

Sarandon Construction just announced it will be paying an annual dividend of $1.48 per share plus an extra dividend of $.56 a share this year.The company also announced that its regular dividend, which is all it anticipates paying after this year, will increase by 2.5 percent annually.What is the anticipated dividend per share next year?

Red's Electronics has a balance sheet with equity account values of: common stock ($1 par) of $70,500; capital surplus of $141,600; and retained earnings of $208,300.How many shares will be outstanding if the firm declares a 2-for-9 reverse stock split?

Tattler, Inc.has declared a dividend of $2.10 a share.Suppose capital gains are not taxed, but dividends are taxed at 15 percent and that the IRS regulations require that taxes be withheld at the time the dividend is paid.Tattler sells for $67 per share, and the stock is about to go ex-dividend.What do you think the ex-dividend price will be?

Botanical Gardens Nursery has 7,500 shares of stock outstanding at a market price of $18 a share.The earnings per share are $1.23.The firm has total assets of $384,000 and total liabilities of $146,000.Today, the firm is paying a quarterly cash dividend of $.22 a share.What will be the earnings per share after the dividend is paid if the tax rate on dividends is 15 percent?

Davidson Interiors declared a dividend to holders of record on Thursday, October 15, that is payable on Monday, November 2.Suenette purchased 200 shares of Davidson Interiors stock on Monday, October 12, and Jake purchased 100 shares of this stock on the following day.Which one of the following statements is correct given this information?

B&K Lumber has 50,600 shares of stock outstanding at a price per share of $68.How many shares will be outstanding if the firm does a 5-for-2stock split?

Two weeks ago, Jensen's declared a dividend of $1.34 a share.The ex-dividend date is tomorrow.All else constant, which one of the following is the best estimate of Jensen's opening stock price tomorrow?