Exam 15: Dividend Policy

The Altern Music Co. earns $4.25 per share, has 70,000 shares outstanding, and a capital budget of $200,000. If Altern Music raises all of its funds internally and follows the "passive residual policy", what are the annual dividends per share?

The capital impairment restriction, a legal constraint on dividend payments, states that

Kaneb Services, Inc. has just declared a 3 for 2 stock split. If the pre-split price of common stock was $42 a share, what will be the post-split price per share (assuming no other changes occur).

A foreign subsidiary with good access to capital within the host country, tends to pay ____ dividends to the parent than subsidiaries with poor access to local capital.

WPI Inc. has the following current equity accounts on its balance sheet: If WPI earned $3.20 per share this year, what is the maximum dividend per share that WPI may pay if the state capital impairment provisions are limited to the par value and the contributed capital in excess of par accounts?

As part of a share repurchase program by a company, a tender offer involves the ____.

Grabill Aerospace Company has just declared a 15% stock dividend. Immediately prior to the stock dividend, the stock was selling for $23 and had a P/E ratio of 14. Calculate the post-stock dividend price of Grabill's stock.

A stock dividend will not affect which of the following balance sheet items.

Under the Revenue Reconciliation Act of 1993, the tax-paying individual investor may prefer low dividends and higher expected capital gains because ____.

From an accounting standpoint, stock splits are accomplished by

Which of the following influences the value of the firm? I. Investment decisions II. Dividend decisions

A firm with stable earnings is usually more willing to

Most states limit dividend policy by requiring

Firms carry out share repurchase agreements in a number of ways, including all of the following EXCEPT:

Last year, Quality's earnings per share were $2.34 and it paid a dividend of $1.10. What was Quality's dividend payout ratio?

What is the signaling effect of dividend payments?

Omega Sports has the following equity accounts on its balance sheet: The current market price of the firm's shares is $20. If the firm declares a 10 percent stock dividend and a cash dividend of $0.10 per share, the retained earning account would change to ____.

What are the procedures for repurchasing stock?

The Percolator Company has the following capital structure: The company declares a 10 percent stock dividend. The pre-stock dividend market price of the company's stock is $50. -Determine the balance in the common stock account after the stock dividend.

Leigh Fibers has 6 million shares outstanding. This year Leigh will have operating income (EBIT) of $36.4 million, interest expenses of $5.8 million, and depreciation expenses of $6.2 million. What will be Leigh's dividend per share if the company has a payout ratio of 30%? Assume a marginal tax rate of 40%.