Discuss the Proposition that a Company's Dividend Policy is Irrelevant Essay

Discuss the Proposition that a Company's Dividend Policy is Irrelevant to its Market Value - Essay Example Some argue that dividend policy will not affect the wealth of the shareholders, whereas some have the opinion that the decisions about dividend policy will affect the shareholder’s wealth and the firm’s valuation. â€Å"Dividend policy refers to the decision regarding the magnitude of the dividend payout, the percentage of earnings paid to the stockholders in the form of dividends. The central, and as yet unresolved, issue concerning dividend policy is whether changes affect firm value† (Dividend Policy 2012). Following are the factors which influence the dividend policy: †¢ Market deficiency for example taxes, agency costs, asymmetric information, flotation costs and transaction costs. †¢ Behavioral considerations for instance illogical shareholder behavior, behavioral desires of shareholders and usual behaviors of firms. †¢ Industry characteristics for example profitability, size, investment opportunities, availability of cash on probable cash fl ows and future earnings. †¢ Managerial likings for example smoothing of dividends and the disinclination to decrease future dividends. Arguments for the Dividend Irrelevance: Dividend Irrelevance is a theory that an organization’s strategy of dividend has no actual influence on the value of the company. â€Å"The main cause for paying or not paying dividends is the cost of tax. Though dividend irrelevance is not absolutely accurate, it is a superior adequate estimate to the certainty that basic assessment should usually do not take into account strategy of dividend† (Expert 2012). The enduring assumption of dividends involves with the aim that if the organization cannot spend its income to make a revisit that is more than expenditure, it must deliver the income by paying dividends to shareholders. â€Å"The theory of dividend irrelevance is founded on the basis that an organizations dividend strategy is sovereign of the value of its share value, in addition to th e dividend choice is an inactive residual. The price of the organization is resolved by its financing and investment decisions in a best capital formation, and not by its decision of dividend. A general policy of dividend should provide every industry its value of shares, as the policy of dividend is irrelevant in resolving the value of the firm† (Barman n.d., p. 17). This method suggests that dividends symbolize earnings residual more willingly than a dynamic decision variable that influences the organization’s worth. Such a vision is reliable with the theory of dividend irrelevance put forward by the authors Merton H. Miller and Franco Modigliani. â€Å"The authors argue that the industries value is ascertained only by the earning risk and authority of its resources, and that the way in which it divides its earnings stream among dividends and internally maintained funds, does not influence this cost. The big variations in dividends increased the value of share. When there is an increase in the dividend, the share prices also get increase and when the dividend decreases, the share price gets reduced† (Gitman 2008, p. 513). An organization fascinates investors whose liking for the stability as well as payment of dividends match with an organization’s solidity of dividends and actual payment pattern. The shareholders wish for constant dividends on the basis of

Student debt management and student budgeting Research Paper

Student debt management and student budgeting - Research Paper Example Rising inflationary pressure and skyrocketing tuition fees are expected to make the situation worse. There is an overwhelming need to allow students to deal with debt management and budgeting in order to make the most out of an educational career. This memo delineates various online sources to help students with their debt and budget management. Online sources analyzed for this task have been assessed under three different suitability criteria – ease of understanding, ease of navigation and relevance to fiscal management. Ease of understanding is included the primary criteria since all students may not be able to comprehend fiscal language well. Ease of navigation is the secondary criteria since finding the right resource at the right time to deal with a fiscal management problem is essential to student debt and budget management. Relevance to fiscal management is the tertiary criteria since myriad material is available online but only some websites offer true fiscal management techniques. CanLearn covers all aspects of educational financing including secondary and post-secondary education. The information presented on CanLearn is specific to the Canadian educational scenario. Information included covers various methods of educational financing including financial aid, scholarships and student loans. CanLearn covers various aspects of student loan financing and repayment in detail though the language is a little advanced. In contrast, Debt 101 presents a simple interface coupled with direct and to the point articles. The information covered on Debt 101 uses simplified language that covers basic as well as advanced student fiscal management topics. This ensures that the information presented on Debt 101 appeals to simple as well as advanced student debt managers. In addition to student loans, Debt 101 offers budgeting tips and techniques that are arranged in a simple interface. This adds to

Revieww the peospects of the UK meeting these targets by 2020, and to Essay

Revieww the peospects of the UK meeting these targets by 2020, and to identify the main barriers that could cause the targets no - Essay Example The paper will throw light on how the EU will meet its target, what barriers it faces and what are the prospect ways in which it can meet its target. Sources of Energy in the UK: In UK energy sources are via both renewable an non renewable sourcues. During 2004, total electricity generated stood as following: gas – 39.93% (0.05% in 1990) coal – 33.08% (67.22% in 1990) nuclear – 19.26% (18.97% in 1990) renewables – 3.55% (0% in 1990) hydroelectric – 1.10% (2.55% in 1990) imports – 1.96% (3.85% in 1990) oil – 1.12% (6.82% in 1990) The currenct electricity consumption in UK stands a 330 TWh p.a reduced in 2009 . At the moment the statistics of it’s fuels stand as following: 1. Coal – 29% 2. Natural Gas- 45% 3. Nuclear- 17% 4. Oil – 1% 5. Hydro and Renewables – 5% 6. Wind – 3 % Coal was the primary source of energy in UK during the 1940s. 90% of the generating capacity of UK was taken care of by coal whil e the remainder was looked after by Oil. Soon UK began expanding it’s energy producing capacity and domains. In the 1950s, it acquired nuclear generating capacity through the Calder Hall that was connected to the grid on 27th August 1956. This set the set trend for various other similar civil stations in the country. At this point more than 26% of the nation’s electicirity was generated via nuclear electricity. It peak in mid 1970s. During this period the overall electricity generation from oil continued to decline. Since the inception of 1993 and all the way through to the 1990s, electricity generation via coal was scaled up to boost gas fuelled generation. Various steps were undertaken to support this endeavor. This includes the privitisation of the National Coal Board, British Gas, the introduction of new policies favoring competition within the UK market and availability of cheap gas from the North sea. The scenario change was from 1.09% to 30.25% of gas produced u sed in electricity generation between 1900 to 2005. By then coal production in power stations had also fallen by 43.6% compared to the previous 1980 levels though it was slightly higher in 1999. During the 1990s and somewhere from it’s mid, reneweable sources of energy began to crop up in UK. They also added to the overall electricity generated, there by giving rise to hydro electricity generation capacity in UK. Current Energy Consumption In the United Kingdom: According to present statistics, United Kingdom is consuming 3894 kgs of oil equivalent per capita. On the contrary the world is consuming approximately 1778.0 kilograms of oil per capital. According to a statistics under taken by worldwide total, the total energy consumed in the last 2 years has been 9.85 exajoules. This means it is an estimated 2% of the world total of 474 EJ of energy. The over all demand for electicity has averaged at 40 GW in the last 2 years and was at 60 GW at it’s peak. The demand for e lectricity has been steadily increasing in the last 5 years in UK. UK 2008-Primary Energy Consumption (Energy resources) The table depicts that in UK primary energy consumption came down by 1.8% in 2008. Table shows that UK is dependent for 75% of its energy from oil and gas. Both oil and gas consumption have increased while coal consumption has decreased by 10.7%.. Almost 40% of the primary energy consumed was utilized in electricity generation. Similarly the contribution by renewable sources of en