In general, what impact should a firm's use of financial leverage have on its dividend policy?
In general, what impact should a firm's use of financial leverage have on its dividend policy?
Homework Answers
As the financial leverage increaes, the interest payments will increase. This will reduce the tax expense of the business, yet the net expense will be higher. This will reduce the net income and thereby the dividend paying capacity of the business. Hence higher the leverage, lower will be the net income available to shareholders. This will lower the dividend available for distributions.
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In general, what impact should a firm's use of financial
leverage have on its dividend policy?
If a firm increases its use of both operating and financial leverage, then you should expect...
If a firm increases its use of both operating and financial leverage, then you should expect the firm's: a. asset beta to exceed its equity beta. b. beta of debt to exceed 1.0. c. beta to remain constant as the increased operating leverage will offset the increased financial leverage. d. equity beta to increase. e. debt beta to exceed its equity beta.
In general, how is a firm's growth rate in earnings per share affected by its dividend...
In general, how is a firm's growth rate in earnings per share affected by its dividend policy?
The residual dividend policy approach to dividend policy is based on the theory that a firm's...
The residual dividend policy approach to dividend policy is based on the theory that a firm's optimal dividend distribution policy is a function of the firm's target capital structure, the investment opportunities available to the firm, and the availability and cost of external capital. The firm makes distributions based on the residual earnings. Consider the case of Red Bison Petroleum Producers Inc.: Red Bison Petroleum Producers Inc. has generated earnings of $180,000,000. Its target capital structure consists of 60% equity...
The residual dividend policy approach to dividend policy is based on the theory that a firm's...
The residual dividend policy approach to dividend policy is based on the theory that a firm's optimal dividend distribution policy is a function of the firm's target capital structure, the investment opportunities available to the firm, and the availability and cost of external capital. The firm makes distributions based on the residual earnings. Consider the case of Red Bison Petroleum Producers Corporation: Red Bison Petroleum Producers Corporation is expected to generate $140,000,000 in net income over the next year. Red...
The residual dividend policy approach to dividend policy is based on the theory that a firm's...
The residual dividend policy approach to dividend policy is based on the theory that a firm's optimal dividend distribution policy is a function of the firm's target capital structure, the investment opportunities available to the firm, and the availability and cost of external capital. The firm makes distributions based on the residual earnings. Consider the case of Purple Hedgehog Forestry Group: Purple Hedgehog Forestry Group is expected to generate $240,000,000 in net income over the next year. Purple Hedgehog Forestry...
La Cucaracha Pest Control, Inc. is reviewing its financial condition. The firm's operating leverage is 2.09....
La Cucaracha Pest Control, Inc. is reviewing its financial condition. The firm's operating leverage is 2.09. The firm’s financial leverage was of 2.08. What is the firm’s degree of combined (total) leverage of La Cucaracha Pest Control, Inc. ?
La Cucaracha Pest Control, Inc. is reviewing its financial condition. The firm's operating leverage is 1.93....
La Cucaracha Pest Control, Inc. is reviewing its financial condition. The firm's operating leverage is 1.93. The firm’s financial leverage was of 2.52. What is the firm’s degree of combined (total) leverage of La Cucaracha Pest Control, Inc. ?
true or false: leverage should have no impact on human resource manangement.
true or false: leverage should have no impact on human resource manangement.
In determining an appropriate dividend policy, an essential matter that should be considered is how imputation...
In determining an appropriate dividend policy, an essential matter that should be considered is how imputation credits will impact the firm's interest payments. Select one: True False
4. Debt (or financial leverage) management ratios Companies have the opportunity to use varying amounts of...
4. Debt (or financial leverage) management ratios Companies have the opportunity to use varying amounts of different sources of financing to acquire their assets, including internal and external sources, and debt (borrowed) and equity funds. Aunt Dottie's Linen Inc. reported no long-term debt in its most recent balance sheet. A company with no debt on its books is referred to as: O a company with no financial leverage, or an unleveraged company O a company with financial leverage, or a...
The residual dividend policy approach to dividend policy is based on the theory that a firm's optimal dividend distribution policy is a function of the firm's target capital structure, the investment opportunities available to the firm, and the availability and cost of external capital. The firm makes distributions based on the residual earnings. Consider the case of Red Bison Petroleum Producers Inc.: Red Bison Petroleum Producers Inc. has generated earnings of $180,000,000. Its target capital structure consists of 60% equity...
The residual dividend policy approach to dividend policy is based on the theory that a firm's optimal dividend distribution policy is a function of the firm's target capital structure, the investment opportunities available to the firm, and the availability and cost of external capital. The firm makes distributions based on the residual earnings. Consider the case of Red Bison Petroleum Producers Corporation: Red Bison Petroleum Producers Corporation is expected to generate $140,000,000 in net income over the next year. Red...
The residual dividend policy approach to dividend policy is based on the theory that a firm's optimal dividend distribution policy is a function of the firm's target capital structure, the investment opportunities available to the firm, and the availability and cost of external capital. The firm makes distributions based on the residual earnings. Consider the case of Purple Hedgehog Forestry Group: Purple Hedgehog Forestry Group is expected to generate $240,000,000 in net income over the next year. Purple Hedgehog Forestry...
4. Debt (or financial leverage) management ratios Companies have the opportunity to use varying amounts of different sources of financing to acquire their assets, including internal and external sources, and debt (borrowed) and equity funds. Aunt Dottie's Linen Inc. reported no long-term debt in its most recent balance sheet. A company with no debt on its books is referred to as: O a company with no financial leverage, or an unleveraged company O a company with financial leverage, or a...
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