Is It Much Ado About Nothing
Is It Much Ado About Nothing
Is It Much Ado About Nothing
Dividend Policy
I. Point of View
III. Objectives
a. Company’s income – A firm whose sales are relatively stable can safely take on
more debt and incur higher fixed charges than a company with unstable sales.
AFC should determine if the sales performance of the company can satisfy the
interest expenses they may incur if the undertake financial borrowing after
meeting its cost of sales and operating expenses, otherwise the results of the
company’s performance should be burden by the shareholders.
b. Firm’s objective of maximizing shareholder value
The company should strike a balance between current dividends and future
growth so as to maximize the firm’s stock price.
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