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Leverage, Dividends & Corporate Governance (Dividends%2Band%2BDividend%2BPolicy.ppt)

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Capital Structure and LeverageDefine and explain leverage, business risk, sales risk, operating risk, and financial risk.Calculate and interpret the degree of operating leverage, the degree of financial leverage, and the degree of total leverage.Characterize the operating leverage, financial leverage, and total leverage of a company given a description of it.Calculate the breakeven quantity of sales and determine the company’s net income at various sales levels.Describe the effect of financial leverage on a company’s net income and return on equity.Compare and contrast the risks of creditors and owners.Dividends and Dividend PolicyReview cash dividends, stock dividends, stock splits, and reverse stock splits and calculate and discuss their impact on a shareholder.Compare the impact on a shareholder wealth of a share repurchase and a cash dividend of equal amount.Calculate the earnings per share effect of a share repurchase is made with borrowed funds and the company’s after-tax cost debt is grater (less) than its earnings yield.Calculate the book value effect of a share repurchase when the market value of a share is greater (less) than the book value per share.Compare and contrast share repurchase methods.Review dividend payment chronology including declaration, holder-of-record, ex-dividend, and payment dates and indicate when the share price will most likely reflect the dividend.Summarize the factors affecting dividend payout policy.Calculate the effective tax rate on a dollar of corporate earnings distributed as a dividend using the double-taxation, split-rate, and tax imputation systems.Discuss the types of information that dividend initiations, increases, decreases, and omissions may convey, and cross-country differences in the signaling content of dividends.Corporate GovernanceDefine corporate governance.Discuss and critique characteristics and practices related to board and committee independence, experience, compensation, external consultants and frequency of elections and determine whether they are supportive of shareowner protection.Define board independence and explain the importance of independent board members in corporate governance.Identify factors that indicate a board and its members possess the experience required to govern the company for the benefit of its shareowners.Explain the provisions that should be included in a strong corporate code of ethics and the implications of a weak code of ethics with regard to related-party transactions and personal use of company assets.State the key areas of responsibility for which board committee are typically crated and explain the criteria for assessing whether each committee is able to adequately represent shareowner interests.Evaluate, from a shareowner’s perspective, company policies related to voting rules, shareowner sponsored proposals, common stock classes and takeover defenses.

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Natalia Elizabeth Rendon Chasi

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Creative Commons -