Describe the journal entry for a stock dividend on a common stock (which has a par value)

Describe the journal entry for a stock dividend on a common stock (which has a par value).

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Consider a firm that has decided to make, but has not yet announced, a large “bonus” cash dividend amounting in the aggregate to $5 million

B3. (Cash dividend versus share repurchase) Consider a firm that has decided to make, but has not yet announced, a large “bonus” cash dividend amounting in the aggregate to $5 million. The firm has 1 million shares outstanding that sell for $20 each. The firm has no debt; there are no taxes; and all transactions take place in a perfect capital market. Using calculations like those in the illustration of dividend irrelevance in a perfect capital market, show that shareholders will be indifferent between whether the firm pays out the “bonus” as a dividend or uses the money to buy back $5 million of its shares.


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Fleming, Inc. had a dividend payout ratio of 25% this year, which resulted in a payout of $80,000 in dividends

Fleming, Inc. had a dividend payout ratio of 25% this year, which resulted in a payout of $80,000 in dividends. Return on sales (ROS) was 8% this year and is expected to increase to 9% next year. If Fleming expects to have $305,100 available from next year’s retained earnings, what percent increase is it forecasting in revenues?


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What are the major advantages of a share repurchase over a cash dividend?

What are the major advantages of a share repurchase over a cash dividend?

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The Management of Russel Inc. is trying to decide whether it can increase its dividend

BE13-11 The Management of Russel Inc. is trying to decide whether it can increase its dividend. During the current year, it reported net income of $875,000. It had cash provided by operating activities of $643,000, paid cash dividends of $80,000, and had capital expenditures of $280,000.

Compute the company’s free cash flow, and discuss whether an increase in the dividend appears warranted. What other factors should be considered?

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(Nonconstant Growth Valuation) A company currently pays a dividend of $2 per share (D0 = $2)

(Nonconstant Growth Valuation)  A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the company’s dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 7% thereafter. The company’s stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stock’s current price?

Click here for the solution: (Nonconstant Growth Valuation) A company currently pays a dividend of $2 per share (D0 = $2)