1. An initial public offering (IPO) occurs when a private company offers shares of its stock to the public for the first time. This allows the company to raise capital and transition to being publicly held.
2. Underwriters play an important role in IPOs by examining the company, setting an appropriate offering price, and ensuring the price is fair. However, underwriters also want a high price since their compensation is a percentage of the offering price.
3. For the Pet.Com IPO specifically, given its poor financial performance, underwriters determine a low stock price of $18 per share is more prudent than the requested high price of $24 per share.
1. The UK stock market has experienced high volatility over the past 3 years, with the FTSE All Share Index falling around 40% from its peak in 2000. With lower expected returns, investors have focused more on dividends as a stable source of cash flow.
2. Historically, total expected stock returns were made up of economic growth, inflation, and dividend yields. But with lower growth and inflation now, dividends are expected to contribute more to returns. Empirical data also shows a relationship between rising stock prices and dividends.
3. However, companies have taken on more debt in recent years and increased operational leverage, putting dividends more at risk. Share buybacks have also become more common,
The document summarizes information about stock dividends, stock splits, and dividend signaling theory presented by multiple students. It includes:
1. Definitions and calculations for stock dividends, how they affect the balance sheet, and that they do not change the equity position of shareholders.
2. Explanations of stock splits and reverse stock splits, noting they do not change the total capitalization but affect share price and number of shares.
3. Discussion of the clientele effect and how different types of investors prefer different dividend payout ratios, affecting stock prices.
4. Overview of the dividend signaling theory that increased dividend payments signal management optimism about the future and positively impact stock prices.
Presentation of Financial Management of Northern University Bangladesh Khulna Campus.
That is prepared as a requisite of this course. This is about some important bond and share information. Anyone can download this for their educational purpose or just for view. I try to prepare this my best. If any mistake found please forgive.
It is mentionable that it is presented in my class and only by me. Pray for me. Best wishes for all.
This document discusses various methods for valuing a company, including:
1. The price-earnings (P/E) ratio method, which values a company based on multiplying its earnings per share by an appropriate P/E ratio.
2. The net assets method, which values a company based on the value of its tangible and intangible assets minus its liabilities.
3. Other methods like dividend-based approaches, discounted cash flow analysis, and cash flow-based valuations.
It provides guidelines for determining an appropriate P/E ratio and discusses factors to consider when using the net assets or P/E ratio methods to value an acquisition target.
The research aims to study the factors that affect the dividends policy at the REITs ,which listed at Kuwait Stock Exchange, using 41 observation of one year, included all 41 REITs, multi linear multi regression model technique was applied. The explanatory variables are, pay-out ratio, cash flow from finance activities, earning per share, assets size, revenues. The study reached to a statistically high significance and positive relationship between dividends per share and all explanatory variables except assets size had no significant effect, also revenue variable had negative relationship with dividends per share.
1. The document discusses dividend policy and types of dividends such as cash dividends, stock dividends, and share repurchases.
2. Regularities in dividend policy are also examined, finding that firms tend to target long-run dividend payout ratios and mature firms with stable earnings usually pay higher dividends.
3. Several theories for why firms pay dividends are presented, including that dividends provide cash flow now versus future capital gains, signaling good private information to the market, and helping to monitor managers.
A Study Of Dividend Policy And Its Effect On Market Value Of Shares Of Select...iosrjce
Dividend policy is a strategy used by a company to determine the amount and timing of dividend
payments. The dividend policy framed by an organization is one of the crucial issues in corporate finance since
it may have an impact on the firm’s value and shareholder wealth. The research study is an attempt to analyze
the effect of dividend policy on shareholder wealth of thirty selected Indian banks listed and traded in Bombay
Stock Exchange (BSE).For the purpose of study the financial data from the period 2003-04 to 2012-13 of
selected Indian banks (15 Public and 15 Private) would be used. The data would be analyzed using statistical
tools like multiple regression technique, t test, the coefficient of determination (R2) and F-Value. The results of
the data analysis might reveal that that there is a significant effect of dividend policy on the share price of
selected Indian Banks. The study is limited to a time period of 10 years and only selected Indian Banks. The
result might change if the time period and number of banks are extended.
Green shoe option allows underwriters of an IPO to purchase up to 15% additional shares of a company at the offering price in order to stabilize share prices. It originated from Green Shoe Manufacturing Company in the 1960s. The green shoe option reduces risk for both the issuing company and underwriters by allowing underwriters to buy back shares if the price falls below the offering price without incurring losses.
1. The UK stock market has experienced high volatility over the past 3 years, with the FTSE All Share Index falling around 40% from its peak in 2000. With lower expected returns, investors have focused more on dividends as a stable source of cash flow.
2. Historically, total expected stock returns were made up of economic growth, inflation, and dividend yields. But with lower growth and inflation now, dividends are expected to contribute more to returns. Empirical data also shows a relationship between rising stock prices and dividends.
3. However, companies have taken on more debt in recent years and increased operational leverage, putting dividends more at risk. Share buybacks have also become more common,
The document summarizes information about stock dividends, stock splits, and dividend signaling theory presented by multiple students. It includes:
1. Definitions and calculations for stock dividends, how they affect the balance sheet, and that they do not change the equity position of shareholders.
2. Explanations of stock splits and reverse stock splits, noting they do not change the total capitalization but affect share price and number of shares.
3. Discussion of the clientele effect and how different types of investors prefer different dividend payout ratios, affecting stock prices.
4. Overview of the dividend signaling theory that increased dividend payments signal management optimism about the future and positively impact stock prices.
Presentation of Financial Management of Northern University Bangladesh Khulna Campus.
That is prepared as a requisite of this course. This is about some important bond and share information. Anyone can download this for their educational purpose or just for view. I try to prepare this my best. If any mistake found please forgive.
It is mentionable that it is presented in my class and only by me. Pray for me. Best wishes for all.
This document discusses various methods for valuing a company, including:
1. The price-earnings (P/E) ratio method, which values a company based on multiplying its earnings per share by an appropriate P/E ratio.
2. The net assets method, which values a company based on the value of its tangible and intangible assets minus its liabilities.
3. Other methods like dividend-based approaches, discounted cash flow analysis, and cash flow-based valuations.
It provides guidelines for determining an appropriate P/E ratio and discusses factors to consider when using the net assets or P/E ratio methods to value an acquisition target.
The research aims to study the factors that affect the dividends policy at the REITs ,which listed at Kuwait Stock Exchange, using 41 observation of one year, included all 41 REITs, multi linear multi regression model technique was applied. The explanatory variables are, pay-out ratio, cash flow from finance activities, earning per share, assets size, revenues. The study reached to a statistically high significance and positive relationship between dividends per share and all explanatory variables except assets size had no significant effect, also revenue variable had negative relationship with dividends per share.
1. The document discusses dividend policy and types of dividends such as cash dividends, stock dividends, and share repurchases.
2. Regularities in dividend policy are also examined, finding that firms tend to target long-run dividend payout ratios and mature firms with stable earnings usually pay higher dividends.
3. Several theories for why firms pay dividends are presented, including that dividends provide cash flow now versus future capital gains, signaling good private information to the market, and helping to monitor managers.
A Study Of Dividend Policy And Its Effect On Market Value Of Shares Of Select...iosrjce
Dividend policy is a strategy used by a company to determine the amount and timing of dividend
payments. The dividend policy framed by an organization is one of the crucial issues in corporate finance since
it may have an impact on the firm’s value and shareholder wealth. The research study is an attempt to analyze
the effect of dividend policy on shareholder wealth of thirty selected Indian banks listed and traded in Bombay
Stock Exchange (BSE).For the purpose of study the financial data from the period 2003-04 to 2012-13 of
selected Indian banks (15 Public and 15 Private) would be used. The data would be analyzed using statistical
tools like multiple regression technique, t test, the coefficient of determination (R2) and F-Value. The results of
the data analysis might reveal that that there is a significant effect of dividend policy on the share price of
selected Indian Banks. The study is limited to a time period of 10 years and only selected Indian Banks. The
result might change if the time period and number of banks are extended.
Green shoe option allows underwriters of an IPO to purchase up to 15% additional shares of a company at the offering price in order to stabilize share prices. It originated from Green Shoe Manufacturing Company in the 1960s. The green shoe option reduces risk for both the issuing company and underwriters by allowing underwriters to buy back shares if the price falls below the offering price without incurring losses.
Leveraged buyouts (LBOs) involve using a large amount of debt to purchase a firm. Typically over 80% of the purchase price is financed through debt secured by the acquired firm's assets. Good LBO candidates have stable cash flows to service the debt, assets to collateralize loans, and a strong competitive position. The APV (adjusted present value) method values a leveraged firm by separately considering the value of operations and tax benefits of debt net of distress costs from high leverage.
This document summarizes Merton Miller's views on dividends and how they relate to a company's value. The key points are:
1. Miller argues that dividends do not actually affect a company's value, but they may appear to due to other factors like changes in investment policy or unexpected earnings.
2. He explains that dividends are really a choice of financing strategy, not investment strategy, and financing sources will offset any value from higher dividends.
3. Stock prices may rise when dividends increase, but this is usually due to unexpected changes in earnings rather than the dividends themselves, following the theory of rational expectations.
American home products corporation copynandia_1113
American Home Products faces low business risk as it operates in stable food and consumer product industries. Using 30% debt would allow it to save on taxes, repurchase shares, and increase its stock price while maintaining a strong credit rating similar to competitors. This capital structure balances the advantages of leverage with maintaining prudent levels of financial risk given AHP's conservative culture. Mr. Laporte should adopt this recommendation to increase shareholder value through tax savings and higher stock prices while keeping risk at a manageable level.
The green shoe option, also known as an over-allotment option, allows investment banks underwriting an IPO to purchase up to an additional 15% of shares at the IPO price in order to stabilize stock prices. It originated from Green Shoe Manufacturing Company implementing this clause in underwriting agreements. In India, SEBI introduced green shoe options in 2003 to stabilize newly listed share prices for up to 30 days after IPO allotment. The option involves underwriters borrowing shares from promoters to over-allocate shares and purchase shares back if prices fall for stabilization.
Working capital adjustments are made when comparing a tested party's transactions to potential comparable transactions to eliminate material differences in working capital levels like inventory, receivables, and payables. A working capital adjustment calculates the value of the working capital differences using an appropriate interest rate to adjust the profit of the comparable. Courts have upheld working capital adjustments but they must be reasonably accurate and eliminate material differences on a case by case basis.
The document discusses the dividend decisions of Reliance Industries Ltd over 4 years from 2005-2009. Some key points:
- RIL's dividend payout ratio increased from 100% to 130% from 2005-2008 tracking the increase in EPS, but remained at 130% in 2009 even as EPS declined.
- RIL's high retention rate of over 85% each year has allowed it to undertake major expansion projects, contributing to rising share prices even with low dividends.
- Models like Walter and Gordon show how high returns on reinvested earnings can increase share prices despite low payouts, in line with RIL's performance.
The document discusses various tactics that can be used during hostile takeovers, including dawn raids, bear hugs, Saturday night specials, and proxy fights as acquisition tactics. It also discusses potential defense tactics for target companies like crown jewels, blank checks, shark repellents, grey knights, white knights, golden parachutes, Pacman, green mail, poison pills, poison puts, people pills, and scorched earth. One highlighted defense tactic is using buy-backs of company shares using borrowed funds, which increases the promoters' stake while negatively impacting cash flows and attractiveness to potential acquirers.
1) The study examines the effect of dividend announcements on stock prices of companies listed on the Dhaka Stock Exchange in Bangladesh.
2) It finds that stock prices increased slightly before dividend announcements but did not sustain gains in the ex-dividend period, with shareholders losing about 20% of value in the 30 days after announcements.
3) However, the lost value was partially compensated by the dividend yield. Overall, the evidence supports the dividend irrelevance hypothesis and indicates announcements do not signal private information to investors.
The document discusses mergers and acquisitions (M&As) and some paradoxes associated with them. It describes the M&As paradox as involving hubris, winners' curse, agency problems, and game theory dynamics. Managers may overestimate the value of acquisitions due to hubris. Acquirers often overpay due to winners' curse. M&As may not benefit shareholders due to agency problems where managers prioritize their own interests like compensation. Game theory shows how managers feel pressure to follow competitors' actions, fueling merger waves even if deals destroy value. Solutions proposed include separating management and control, performance-based compensation, and government regulation.
Leveraged buyouts (LBOs) involve using borrowed funds to acquire a company. In an LBO, a group of investors including private equity firms and company managers use a large amount of debt relative to equity to purchase an underperforming company. The strategy is to restructure the company to improve performance and cash flows to repay the initial debt over time. Tata Steel's acquisition of Corus for $12.9 billion in 2007 was one such LBO, funded through equity capital, long-term bank debt, and quasi-equity financing.
This document analyzes 63 rights issues conducted by S&P/ASX300 companies between 2010-2012 to compare actual underwriting fees paid against a benchmark valuation model. It finds that on average, companies paid a 46% premium over the benchmark value, equating to an aggregate $172M excess or $2.7M per raising. This suggests companies overpaid for underwriting services compared to the actual shortfall risk. Underwriting fees have also risen 60% over 20 years despite reduced risks, potentially harming investors. The study aims to determine if fee amounts reasonably reflect risks or if boards could obtain better value.
This document provides an introduction and overview of dividend policy and its impact on market price. It discusses different types of dividends and dividend policies. It summarizes two key models - the Walter model and Gordon model - that show the relationship between dividends, earnings, growth rate, and market price. The document also discusses the scope of the report, which is to study the annual reports of different power sector companies in India, including NTPC Limited, NHPC, TATA Power, Power Grid Corporation of India Limited, and Torrent, to analyze their dividend policies and the impact on their market prices.
MBA Finance Project Report By Shobhit Jain.Shobhit Jain
The document discusses the conceptual overview of dividend decision policy. It defines dividend decision as the policy formulated regarding earnings distribution to shareholders versus retention. Key points discussed include:
- Factors influencing dividend decisions like liquidity, earnings stability, financing needs, and legal requirements.
- Forms of dividends like cash, stock, and property dividends.
- Models of dividend policy including Walter's, Gordon's, and Modigliani-Miller models.
- Dimensions considered in dividend policy including stability, mean payout ratio, and questions around growth versus return of capital to shareholders.
The document provides an overview of the conceptual factors involved in a company's dividend decision-making process.
There are three main categories of dividend theories: dividend relevance theories, dividend irrelevance theories, and theories related to dividends and uncertainty. Dividend relevance theories argue that a firm's dividend policy affects its value, as proposed by Walter and Gordon in their respective models. Dividend irrelevance theories, proposed by Modigliani and Miller, state that dividend policy does not impact firm value under certain assumptions. Theories of dividends and uncertainty suggest that investors prefer dividends in the present over future dividends due to uncertainty.
Petaling Tin Berhad is a public listed property development and investment holding company in Malaysia. Based on its 2016 annual report:
- Total assets were RM436.7 million, with non-current assets of RM385.9 million and current assets of RM44 million.
- Total revenue was RM28.8 million with a net profit of RM8.1 million.
- The company has 3 types of shares - ordinary shares worth RM346.1 million, treasury shares worth RM68,236, and premium shares worth RM44 million. No dividends have been paid in the current period.
- Financial ratios like the acid-test ratio of 1.21 and debt-to
This document summarizes the key aspects of a leveraged buyout (LBO). It defines an LBO as the acquisition of a company using mostly debt rather than equity financing. The document outlines the typical stages of an LBO including raising funds, creating a shell company, purchasing shares/assets, improving operations, and a potential secondary public offering. It also discusses the characteristics of good LBO targets, sources of gains like tax savings and management incentives, and provides an example of KKR's famous LBO of RJR Nabisco in the late 1980s.
The document discusses various theories around how investors view dividend policy and distributions to shareholders. It describes the dividend irrelevance theory, bird-in-the-hand theory, and tax preference theory and their implications for managers. The document also covers signaling effects of dividends, stock repurchases as an alternative to dividends, and factors managers consider when setting dividend policy, including forecasting capital needs and targeting payout ratios.
The document discusses share buybacks by company promoters. It provides three main reasons why promoters may offer to buy back shares: 1) to support falling share prices and boost investor confidence, 2) to increase their ownership stake and defend against potential takeover bids, and 3) if the share price is lower than the company's intrinsic value. The buyback indicates to investors that share prices could rise in the medium term as it shows the promoter's confidence in the company.
Published Spring 2008 in the Journal of Employee Ownership Law and Finance
Jim Steiker describes how warrants are used as part of the financing structure of leveraged ESOP transactions and discusses key corporate finance and federal tax considerations in structuring ESOP financing arrangements involving warrants.
Dissertation on the Impacts of Microfinance in Kenya final reportFred Mmbololo
This document discusses a study on microfinance awareness and impact in Nairobi County, Kenya. It provides background on microfinance and its role in development. The study aims to evaluate the level of development of microfinance institutions in Nairobi County, examine the impacts of microfinance, and identify strategies employed by microfinance institutions. It employs a research design using both primary and secondary data collection methods. The results and discussion chapter analyzes respondents' profiles, levels of microfinance institution development, impacts of microfinance, and strategies used by institutions. The conclusion summarizes the major findings and provides recommendations.
A research proposal on the Impacts of Microfinance in KenyaFred Mmbololo
This document outlines a proposed research study on microfinance awareness and impact in Nairobi County, Kenya. The study aims to determine the level of awareness of microfinance services among Nairobi residents and assess the impacts of microfinance on economic and social development. The researcher plans to survey Nairobi residents on their familiarity with local microfinance institutions and perceptions of how microfinance has affected areas like income, assets, education, and empowerment. The results could provide insight for microfinance institutions, government, and academics on the reach of services and viability of continued support for microfinance in Kenya.
The document provides an overview of balance sheets, including their purposes, elements, and reporting classifications. Some key points:
1) A balance sheet summarizes a company's financial position by reporting assets, liabilities, and equity as of a specific date based on the basic accounting equation of assets equaling liabilities plus equity.
2) It helps users assess the company's liquidity, financial flexibility, operating capability, and income-producing performance.
3) Elements recognized in the balance sheet must meet certain criteria and be measurable, relevant, and reliable. Major elements are assets, liabilities, and equity.
4) Assets and liabilities are generally measured using historical cost, but some may use
Leveraged buyouts (LBOs) involve using a large amount of debt to purchase a firm. Typically over 80% of the purchase price is financed through debt secured by the acquired firm's assets. Good LBO candidates have stable cash flows to service the debt, assets to collateralize loans, and a strong competitive position. The APV (adjusted present value) method values a leveraged firm by separately considering the value of operations and tax benefits of debt net of distress costs from high leverage.
This document summarizes Merton Miller's views on dividends and how they relate to a company's value. The key points are:
1. Miller argues that dividends do not actually affect a company's value, but they may appear to due to other factors like changes in investment policy or unexpected earnings.
2. He explains that dividends are really a choice of financing strategy, not investment strategy, and financing sources will offset any value from higher dividends.
3. Stock prices may rise when dividends increase, but this is usually due to unexpected changes in earnings rather than the dividends themselves, following the theory of rational expectations.
American home products corporation copynandia_1113
American Home Products faces low business risk as it operates in stable food and consumer product industries. Using 30% debt would allow it to save on taxes, repurchase shares, and increase its stock price while maintaining a strong credit rating similar to competitors. This capital structure balances the advantages of leverage with maintaining prudent levels of financial risk given AHP's conservative culture. Mr. Laporte should adopt this recommendation to increase shareholder value through tax savings and higher stock prices while keeping risk at a manageable level.
The green shoe option, also known as an over-allotment option, allows investment banks underwriting an IPO to purchase up to an additional 15% of shares at the IPO price in order to stabilize stock prices. It originated from Green Shoe Manufacturing Company implementing this clause in underwriting agreements. In India, SEBI introduced green shoe options in 2003 to stabilize newly listed share prices for up to 30 days after IPO allotment. The option involves underwriters borrowing shares from promoters to over-allocate shares and purchase shares back if prices fall for stabilization.
Working capital adjustments are made when comparing a tested party's transactions to potential comparable transactions to eliminate material differences in working capital levels like inventory, receivables, and payables. A working capital adjustment calculates the value of the working capital differences using an appropriate interest rate to adjust the profit of the comparable. Courts have upheld working capital adjustments but they must be reasonably accurate and eliminate material differences on a case by case basis.
The document discusses the dividend decisions of Reliance Industries Ltd over 4 years from 2005-2009. Some key points:
- RIL's dividend payout ratio increased from 100% to 130% from 2005-2008 tracking the increase in EPS, but remained at 130% in 2009 even as EPS declined.
- RIL's high retention rate of over 85% each year has allowed it to undertake major expansion projects, contributing to rising share prices even with low dividends.
- Models like Walter and Gordon show how high returns on reinvested earnings can increase share prices despite low payouts, in line with RIL's performance.
The document discusses various tactics that can be used during hostile takeovers, including dawn raids, bear hugs, Saturday night specials, and proxy fights as acquisition tactics. It also discusses potential defense tactics for target companies like crown jewels, blank checks, shark repellents, grey knights, white knights, golden parachutes, Pacman, green mail, poison pills, poison puts, people pills, and scorched earth. One highlighted defense tactic is using buy-backs of company shares using borrowed funds, which increases the promoters' stake while negatively impacting cash flows and attractiveness to potential acquirers.
1) The study examines the effect of dividend announcements on stock prices of companies listed on the Dhaka Stock Exchange in Bangladesh.
2) It finds that stock prices increased slightly before dividend announcements but did not sustain gains in the ex-dividend period, with shareholders losing about 20% of value in the 30 days after announcements.
3) However, the lost value was partially compensated by the dividend yield. Overall, the evidence supports the dividend irrelevance hypothesis and indicates announcements do not signal private information to investors.
The document discusses mergers and acquisitions (M&As) and some paradoxes associated with them. It describes the M&As paradox as involving hubris, winners' curse, agency problems, and game theory dynamics. Managers may overestimate the value of acquisitions due to hubris. Acquirers often overpay due to winners' curse. M&As may not benefit shareholders due to agency problems where managers prioritize their own interests like compensation. Game theory shows how managers feel pressure to follow competitors' actions, fueling merger waves even if deals destroy value. Solutions proposed include separating management and control, performance-based compensation, and government regulation.
Leveraged buyouts (LBOs) involve using borrowed funds to acquire a company. In an LBO, a group of investors including private equity firms and company managers use a large amount of debt relative to equity to purchase an underperforming company. The strategy is to restructure the company to improve performance and cash flows to repay the initial debt over time. Tata Steel's acquisition of Corus for $12.9 billion in 2007 was one such LBO, funded through equity capital, long-term bank debt, and quasi-equity financing.
This document analyzes 63 rights issues conducted by S&P/ASX300 companies between 2010-2012 to compare actual underwriting fees paid against a benchmark valuation model. It finds that on average, companies paid a 46% premium over the benchmark value, equating to an aggregate $172M excess or $2.7M per raising. This suggests companies overpaid for underwriting services compared to the actual shortfall risk. Underwriting fees have also risen 60% over 20 years despite reduced risks, potentially harming investors. The study aims to determine if fee amounts reasonably reflect risks or if boards could obtain better value.
This document provides an introduction and overview of dividend policy and its impact on market price. It discusses different types of dividends and dividend policies. It summarizes two key models - the Walter model and Gordon model - that show the relationship between dividends, earnings, growth rate, and market price. The document also discusses the scope of the report, which is to study the annual reports of different power sector companies in India, including NTPC Limited, NHPC, TATA Power, Power Grid Corporation of India Limited, and Torrent, to analyze their dividend policies and the impact on their market prices.
MBA Finance Project Report By Shobhit Jain.Shobhit Jain
The document discusses the conceptual overview of dividend decision policy. It defines dividend decision as the policy formulated regarding earnings distribution to shareholders versus retention. Key points discussed include:
- Factors influencing dividend decisions like liquidity, earnings stability, financing needs, and legal requirements.
- Forms of dividends like cash, stock, and property dividends.
- Models of dividend policy including Walter's, Gordon's, and Modigliani-Miller models.
- Dimensions considered in dividend policy including stability, mean payout ratio, and questions around growth versus return of capital to shareholders.
The document provides an overview of the conceptual factors involved in a company's dividend decision-making process.
There are three main categories of dividend theories: dividend relevance theories, dividend irrelevance theories, and theories related to dividends and uncertainty. Dividend relevance theories argue that a firm's dividend policy affects its value, as proposed by Walter and Gordon in their respective models. Dividend irrelevance theories, proposed by Modigliani and Miller, state that dividend policy does not impact firm value under certain assumptions. Theories of dividends and uncertainty suggest that investors prefer dividends in the present over future dividends due to uncertainty.
Petaling Tin Berhad is a public listed property development and investment holding company in Malaysia. Based on its 2016 annual report:
- Total assets were RM436.7 million, with non-current assets of RM385.9 million and current assets of RM44 million.
- Total revenue was RM28.8 million with a net profit of RM8.1 million.
- The company has 3 types of shares - ordinary shares worth RM346.1 million, treasury shares worth RM68,236, and premium shares worth RM44 million. No dividends have been paid in the current period.
- Financial ratios like the acid-test ratio of 1.21 and debt-to
This document summarizes the key aspects of a leveraged buyout (LBO). It defines an LBO as the acquisition of a company using mostly debt rather than equity financing. The document outlines the typical stages of an LBO including raising funds, creating a shell company, purchasing shares/assets, improving operations, and a potential secondary public offering. It also discusses the characteristics of good LBO targets, sources of gains like tax savings and management incentives, and provides an example of KKR's famous LBO of RJR Nabisco in the late 1980s.
The document discusses various theories around how investors view dividend policy and distributions to shareholders. It describes the dividend irrelevance theory, bird-in-the-hand theory, and tax preference theory and their implications for managers. The document also covers signaling effects of dividends, stock repurchases as an alternative to dividends, and factors managers consider when setting dividend policy, including forecasting capital needs and targeting payout ratios.
The document discusses share buybacks by company promoters. It provides three main reasons why promoters may offer to buy back shares: 1) to support falling share prices and boost investor confidence, 2) to increase their ownership stake and defend against potential takeover bids, and 3) if the share price is lower than the company's intrinsic value. The buyback indicates to investors that share prices could rise in the medium term as it shows the promoter's confidence in the company.
Published Spring 2008 in the Journal of Employee Ownership Law and Finance
Jim Steiker describes how warrants are used as part of the financing structure of leveraged ESOP transactions and discusses key corporate finance and federal tax considerations in structuring ESOP financing arrangements involving warrants.
Dissertation on the Impacts of Microfinance in Kenya final reportFred Mmbololo
This document discusses a study on microfinance awareness and impact in Nairobi County, Kenya. It provides background on microfinance and its role in development. The study aims to evaluate the level of development of microfinance institutions in Nairobi County, examine the impacts of microfinance, and identify strategies employed by microfinance institutions. It employs a research design using both primary and secondary data collection methods. The results and discussion chapter analyzes respondents' profiles, levels of microfinance institution development, impacts of microfinance, and strategies used by institutions. The conclusion summarizes the major findings and provides recommendations.
A research proposal on the Impacts of Microfinance in KenyaFred Mmbololo
This document outlines a proposed research study on microfinance awareness and impact in Nairobi County, Kenya. The study aims to determine the level of awareness of microfinance services among Nairobi residents and assess the impacts of microfinance on economic and social development. The researcher plans to survey Nairobi residents on their familiarity with local microfinance institutions and perceptions of how microfinance has affected areas like income, assets, education, and empowerment. The results could provide insight for microfinance institutions, government, and academics on the reach of services and viability of continued support for microfinance in Kenya.
The document provides an overview of balance sheets, including their purposes, elements, and reporting classifications. Some key points:
1) A balance sheet summarizes a company's financial position by reporting assets, liabilities, and equity as of a specific date based on the basic accounting equation of assets equaling liabilities plus equity.
2) It helps users assess the company's liquidity, financial flexibility, operating capability, and income-producing performance.
3) Elements recognized in the balance sheet must meet certain criteria and be measurable, relevant, and reliable. Major elements are assets, liabilities, and equity.
4) Assets and liabilities are generally measured using historical cost, but some may use
Lajem College is a private college in Nairobi, Kenya that offers computing and IT courses. It aims to serve both the premium and middle class markets. The business plan outlines the company description, objectives, courses offered, target market analysis, and marketing strategy. The objectives are to achieve 30% annual growth, provide job placements for 75% of students, and open 3 new teaching centers per year. A variety of computing, programming, and software courses are offered at beginner, intermediate, and advanced levels. The target market includes students, professionals, and government officials. The marketing plan details segmentation, targeting, positioning, and a 1-year action plan to establish 3 new coaching centers across Kenya.
A research proposal on non financial reporting by Fred M'mbololoFred Mmbololo
This research proposal compares non-financial reporting practices in Australia and the European Union. Non-financial reporting enables businesses to communicate their environmental, social, and ethical performance to stakeholders. In Australia, non-financial reporting is voluntary, while the EU's Non-Financial Reporting Directive mandates certain large companies disclose information on environmental, social, and governance matters. The proposal will explore differences and similarities in non-financial reporting frameworks and common CSR activities between Australia, the EU, and the US to identify variations in reporting forms and features.
Marketing planning at just us cafe fredFred Mmbololo
This document provides a marketing plan for Just Us Café, a fair trade coffee company based in Canada. It includes an analysis of the company's internal and external environment using various frameworks. Competitors are identified and analyzed. Recommendations are made on how to improve the outdated marketing plan, increase customer loyalty, and address challenges. The plan covers topics such as using social media, providing free samples, and creating brand value to help the company grow.
Consulting ten commandments of small business [lesson]Fred Mmbololo
This document outlines 11 commandments or principles for small businesses to follow, including establishing a clear mission statement and strategic direction, building loyal and accountable employees while continuously upgrading management, maintaining strong relationships with vendors, customers and advisors, keeping costs and prices low while focusing on quality, growing prudently and profitably, creating operational excellence, installing management processes, and ensuring the business makes a profit.
This document discusses management style at Tintoria Ltd, a dry cleaning company. It describes the company's vision of being an environmentally friendly, world-class quality service enterprise. It explains that the management leads through vision and values learning, innovation, and relationships. Management practices "walking around" to check on employees, ask for suggestions, and recognize good work. Management aims to visit all employees equally and will follow up later if unable to answer a question immediately, in order to build trust.
This document discusses cost-volume-profit (CVP) analysis for Paukovich Consulting Company. It provides the CVP formula and calculates costs, revenues, profits and break-even point for years 20X1 and 20X2. For 20X2, total costs are calculated to be $2,003,000 and the target net income is $500,000. Using the CVP formula, total revenues needed to achieve this are calculated to be $2,628,000. The degree of operating leverage is also calculated, showing the risk associated with a high proportion of fixed costs. Finally, the margin of safety is found to be 56.5%, indicating current sales would need to drop by this amount before reaching
Kenka Invest Potato Plantation seeks financing from AFC Bank to expand its potato farming operations. Kenka has over 10 years of experience in potato planting and owns over 1,500 hectares of suitable land in Nyahururu, Kenya. The business plans to plant potatoes on 1,000 hectares which could produce over 72,000 tons of potatoes annually. Kenka aims to become a leading agribusiness in Kenya and sees potential for growth in potato consumption and reduced imports. The financial projections estimate that revenue could reach over KSH 3 million by the second year with net profits.
Ias 32 - compound financial instruments Fred Mmbololo
1. A compound financial instrument contains both debt and equity elements, such as a convertible bond. IAS 32 requires separating compound instruments into their debt and equity components.
2. To split the components, the present value of future cash flows for the debt is calculated using market rates for similar non-convertible debt. The equity portion equals total proceeds minus the debt value.
3. Transaction costs are allocated propotionally to the debt and equity amounts. The components are accounted for separately over time, and both are extinguished if conversion occurs through issuance of shares.
The document discusses process costing, which is used to assign costs to standardized products produced continuously. It describes the five steps of process costing: 1) analyzing physical unit flow, 2) computing equivalent units, 3) computing equivalent unit costs, 4) summarizing total costs, and 5) assigning costs to completed units and work-in-process. The two main methods are weighted average and FIFO. Examples show journal entries to record costs and calculations to assign costs using equivalent units and cost per equivalent unit.
Types of Ratio analyis and their significanceFred Mmbololo
Ratio analysis is used to analyze financial statements and determine key metrics and relationships between items. It can help management with forecasting, planning, control, and decision making. There are various types of ratios that provide different insights. Liquidity ratios like current and quick ratios measure a company's ability to meet short-term obligations. Leverage or capital structure ratios like debt-to-equity examine how the company is financing its assets and level of financial risk. Activity/turnover ratios review how efficiently a company uses its assets. Profitability ratios assess return on sales, assets, and equity. Ratio analysis provides both opportunities to understand a business better but also has some limitations to consider.
This document is a research project submitted by Kennedy Nyabwala to Maseno University in partial fulfillment of a Bachelor of Business Administration degree. The research examines the impact of microfinancing on the performance of small and medium enterprises in Kisumu Central Business District, Kenya. It includes an introduction providing background on microfinancing concepts and the microfinance industry in Kenya. The study aims to determine if local SMEs have obtained loans from microfinance institutions, if loan recipients have repaid as required, and if financing has helped SMEs grow. The significance of the research is recognizing the importance of microfinancing for SME development.
Zero-based budgeting (ZBB) requires managers to justify all expenditures as if the budget is being created for the first time. The process involves identifying organizational decision units, constructing decision packages that analyze activities and funding alternatives, and ranking packages to allocate resources. ZBB aims to eliminate unnecessary costs by questioning existing resource allocations and requiring justification of all spending. While time-intensive, ZBB can help organizations set priorities and ensure costs align with objectives, particularly in uncertain economic environments. Successful implementation requires training managers, clear procedures, management commitment, and adequate time for the rigorous analysis involved.
Safaricom marketing mix and it's environmentFred Mmbololo
Marketing plays a fundamental role in enhancing a company’s growth and performance in capturing new markets, retaining the market and stimulating financial strengths in income returns of an organization.
Marketing stuff mcgraw-hill- The marketing environmentFred Mmbololo
This document provides an overview of the marketing environment and how companies monitor and respond to changes within it. It discusses the macroenvironment, which includes political/legal, economic, ecological/physical, social/cultural, and technological forces outside a company's control. It also briefly introduces the microenvironment, which includes customers, competitors, distributors, and suppliers. The document focuses on describing the political/legal forces in the EU and individual countries that can influence marketing, such as laws around competition, mergers and acquisitions, state aid, and national regulations. It then discusses key economic forces including economic growth and unemployment, interest and exchange rates, and the growth of emerging markets.
There are many ways a company can go public on the equities markets. Learn the difference between a traditional IPO and APO (alternative public offering) from Charms Investments.
The document provides an overview of the procedures involved in an initial public offering (IPO) and follow-on public offering (FPO). It discusses that an IPO is when a private company first offers shares to the public, transforming into a public company to raise expansion capital. A FPO is a subsequent public offering by an already publicly traded company, which can dilute existing shareholders or allow some to decrease their ownership stakes. The roles of intermediaries like book runners, bankers, and underwriters in pricing and managing the offerings are also outlined.
The document discusses initial public offerings (IPOs) in India. It defines an IPO as a company's first sale of shares to the public on a stock exchange, which allows the company to raise capital. The key objectives of an IPO are to raise funds for future growth and development. The document outlines the principal steps in conducting an IPO in India, including appointing advisors, filing documents with regulatory agencies, marketing the offering, and listing shares on an exchange. It also discusses important considerations for pricing an IPO, such as balancing the interests of the company and investors. The book building process used to set the IPO price is described.
Part IThe interest rate is the profit that is received over tim.docxssuser562afc1
Part I:
The interest rate is the profit that is received over time in relation to an amount loaned (Gitman & Zutter, 2012). It is the compensation that a supplier of funds expects and a demander of funds must pay. A variety of factors can influence the equilibrium interest rate. One of them is inflation, a rising trend in the prices of most goods and services. For example, a lender may be lender may be hesitant to lend money for any period of time if the purchasing power of that money will be less when it’s reimbursed, therefore the lender will demand a higher rate which is called inflationary premium. Thus, inflation pushes interest rates higher; deflation causes rates to decline. A second factor influencing interest rates is a risk. Interest rate risk arises from adverse changes in interest rates, causing higher interest costs or lower investment income and therefore lower profits or even losses. At any point when individuals see that a specific speculation is more dangerous, they will expect a higher profit for that venture as remuneration for bearing the hazard. A third factor that can affect the interest rate is a liquidity preference among investors. The term liquidity preference refers to the general tendency of investors to prefer short-term securities (Gitman & Zutter, 2012).
Part II:
One of the interesting topics of Chapter 7 and 8 was Going Public. When a firm decides to sell its stock in the primary market, there are three possible ways to do them: Either it can be done with a public offering or with right offerings or with a private placement. To go public, it is very important to get approvals from their current shareholders because currently the company is privately owned and issued stocks. After the approvals, the next step is to get all the documents certified to prove the legitimacy of the company and get investment banks to underwrite the offerings. After this, a company gets registered with SEC and the investment community can begin analyzing the company’s prospects. At this point, all the investment bankers and company executives start promoting the company’s stock by road shows, media to attract potential investors from all over the place. And at last after the underwriter sets terms and prices the issue, the SEC must approve the offering and it becomes public (Gitman & Zutter, 2012). Companies decide how they want to go public depending on the level of involvement company wants from the market and how much capital business needs. Recently Spotify went public and they didn’t release additional shares, rather they simply list existing shares directly on the NYSE without getting help or relying on underwriters to help assess demand and set a price ( Disis & Fiegerman, 2018).
References:
Gitman, L., & Zutter, C. (2012). Managerial Finance. Boston: Prentice Hall - Pearson.
Jill Disis and Seth Fiegerman, April 3, 2018. Spotify goes public in an unconventional IPO. Retrieved from: http://money.cnn.com/2018/04/02/technology/bus.
CMC Markets Trading Smart Series: Company FundamentalsCMCMarketsSG
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The document discusses restrictive covenants in debt contracts and their role in addressing moral hazard. Restrictive covenants are included in debt contracts to discourage undesirable behavior by borrowers, encourage desirable behavior, keep collateral valuable, and provide information to lenders. By monitoring compliance with covenants, lenders can reduce moral hazard which arises from asymmetric information between borrowers and lenders. Complicated legal language and many covenants are used because debt contracts involve transaction and information costs.
1. The document discusses analyzing factors that influence the success and failure of initial public offerings (IPOs) and provides investing tips for investors.
2. It analyzes 3 past IPOs to learn lessons and apply that knowledge to evaluate upcoming IPOs. Literature on IPO pricing mechanisms and performance is also reviewed.
3. The goal is to help investors make informed investment decisions by understanding what drives IPO performance and applying that to evaluate new offerings.
The document discusses several research papers related to analyzing factors that influence initial public offering (IPO) pricing and performance. It examines whether IPOs are typically underpriced or overpriced, and the factors like firm characteristics, market conditions, and risk disclosures that affect pricing. It also looks at different methods used for IPO valuation like discounted cash flow analysis and compares implied growth rates to actual post-IPO performance.
This document provides an overview of a research project on IPO pricing and growth rates implied in offer prices. It contains an introduction that discusses challenges in valuing IPO firms and approaches used. It also includes a literature review, research methodology with objectives and data sources, and a summary of key findings. The research derives implied cash flow growth rates from 184 European IPOs priced using discounted cash flow models. It finds the average IPO firm is expected to grow cash flows by 33% annually, though actual post-IPO growth rates are slightly positive. Forecast errors are associated with factors like market-to-book ratio and leverage, and negatively impact long-term stock returns.
- Stocks represent ownership in a company. Companies issue stock to raise money for growth in a process called equity financing, selling portions of the company. This allows companies to expand without taking on debt.
- Stock prices change based on supply and demand from investors. Prices rise when demand is high and fall when supply is high. Fundamentals like company earnings and future growth expectations also impact investor sentiment and demand.
- While no one can predict with certainty how stock prices will change, prices are generally volatile and can rise or fall rapidly based on investors' shifting expectations of company value.
The document discusses various aspects of corporate restructuring through mergers and acquisitions. It defines different types of mergers such as mergers, acquisitions, and consolidations. It also describes friendly and unfriendly takeover procedures. Reasons for mergers include synergies, growth, diversification, and economies of scale. Defensive tactics that target companies use to resist takeovers are also outlined.
The document provides an overview of the IPO process. It begins by explaining what an IPO is, noting that it is the first sale of stock by a company to the public, allowing the company to raise money by issuing equity. It then discusses the steps involved in the IPO process over a 12 month period, including forming a professional team, conducting due diligence, drafting financial statements and prospectus, filing with regulatory agencies, and ultimately issuing and selling shares to investors. The document emphasizes the importance of proper planning and an experienced team to ensure a smooth IPO.
Critical Analysis of Reasons of IPO failurenitingoswami
Final year project for PGDBM from MS ramaiah Institute Of Management.
It discuss various reasons why IPO fails in Market and various takes of Investors and Rural India on IPO.
The document discusses various methods for issuing shares and setting dividend policies for both public and private companies. It provides details on rights issues, bonus issues, stock splits, and scrip dividends. It also discusses the relevance of dividend policy according to Modigliani and Miller's theory and practical influences on dividend policy, including signaling effects, liquidity preference, and taxation considerations.
The document outlines Tintoria Ltd's fixed asset capitalization policy. Key points include:
- Assets over Kshs 50,000 are capitalized, except for land and buildings which require a Kshs 100,000 minimum.
- Capitalizable costs include acquisition costs and improvements extending asset life.
- Assets are categorized and depreciated according to class. Land is not depreciated.
- The policy aims to comply with accounting standards and ensure proper financial reporting of fixed assets.
This document is an accounting manual for Tintoria Ltd, a laundry firm in Kenya. It outlines the company's background and services, accounting principles and procedures, policies around cash disbursements and receipts, bank reconciliation, stock control, customer reconciliation, end of month/year procedures, budgeting, computer/record policies, and asset management. The manual provides guidance to ensure uniform and standard accounting practices for the company.
This document provides a strategic plan for Tintoria Ltd for the period of June 2015 to June 2019. It begins with an introduction to strategic planning and what it involves. It then presents an executive summary of Tintoria Ltd's strategic planning process. The next sections outline the company's vision, mission, values, history and organizational structure. A discussion of the need for strategic planning and various analysis tools used follows. The document provides an overview of Tintoria Ltd's operations and the strategic planning steps undertaken. It aims to guide the company's goals and objectives to ensure long term growth and sustainability.
Kcse performance in Kenyan Secondary SchoolsFred Mmbololo
This document summarizes a dissertation on factors affecting secondary school performance in Kilungu District, Makueni County, Kenya. The dissertation examines how teaching and learning resources, head teachers' instructional supervision, teachers' professional qualifications, and teaching experience impact student performance on the Kenya Certificate of Secondary Education (KCSE) exam. The dissertation presents literature reviewing previous studies on these factors in other areas of Kenya. It finds that inadequate resources, lack of teacher experience and qualifications, and insufficient supervision can negatively influence exam scores. The dissertation aims to determine the impact of these factors specifically in Kilungu District secondary schools.
Tintoria ltd strategic plan june 2011 to june 2015Fred Mmbololo
The document discusses the benefits of exercise for mental health. Regular physical activity can help reduce anxiety and depression and improve mood and cognitive functioning. Exercise causes chemical changes in the brain that may help protect against mental illness and improve symptoms.
Sirona car hire provides car rental services to corporate clients. It aims to establish loyal customers through friendly and reliable customer service. The company owns cars that it leases to customers. It has locations near airports and corporate areas that are open 24 hours a day. Sirona car hire targets corporate clients who need cars for business travel. It offers competitive prices and quality vehicles and service. The company's goals are to grow profitably and increase its market share through strong customer satisfaction.
The document provides a business plan for The Loft, a luxury hotel located in Nairobi, Kenya. The plan outlines the company's mission to provide luxury hospitality services and high customer satisfaction. It analyzes the competitive hotel market in Nairobi and segments potential customer types. The plan details marketing objectives, a SWOT analysis, and marketing mix strategies around pricing, distribution, advertising, and customer service. Financial projections forecast sales growth of 10-12% annually through focus on occupancy rates, new customers, and customer loyalty.
This document provides an introduction to a research study on assessing the relative importance of traditional budgeting techniques versus alternative approaches such as Beyond Budgeting. The study aims to evaluate whether the traditional budgeting system should be replaced given its limitations and criticisms. It involves a qualitative case study of a company, referred to as Case study A, that uses traditional budgeting practices. The researcher will analyze the budgeting process, problems with the traditional approach, and alternatives like Beyond Budgeting through literature review and interviews. The goal is to determine if Beyond Budgeting or another model is a more relevant management tool for today's competitive business environment.
Tintoria Laundry Academy proposed a new laundry training program. A SWOT analysis identified strengths like expertise in laundry skills and a good reputation, but also weaknesses such as being a new business with high start-up costs. Opportunities included offering a new local service, while threats included competition from established training programs and potential oversaturation of laundries in the area.
Tintoria Ltd is a laundry firm established in 1993 that provides dry cleaning and laundry services. This 2-year strategic plan covers 2019-2021 and was prepared by Fred M'mbololo. The plan includes a vision to be an environmentally friendly, world-class quality service enterprise utilizing state-of-the-art technology. It analyzes the company's strengths, weaknesses, opportunities, threats and competitors. The plan also outlines the company's history, services, processes, values, and goals to guide its continued growth and market leadership in laundry and dry cleaning.
Power of digital presentation ACCA presentationFred Mmbololo
This document discusses how digital disruption is impacting the accounting profession and how ACCA is preparing accountants for this changing landscape. It makes the following key points:
1) Digital technologies like automation, AI, and blockchain are transforming the finance function and challenging existing business models.
2) In response, ACCA is enhancing its qualification program and CPD resources to ensure students and members have relevant digital skills, including data analytics training.
3) ACCA conducts extensive research on digital topics and how technologies impact roles and careers, helping the profession embrace opportunities while maintaining high-value human skills.
4) Rather than a threat, digital offers tremendous potential if accountants leverage technologies to take on more strategic
Safaricom marketing mix and it's environmentFred Mmbololo
This document provides an overview of Safaricom's marketing mix and environment. It begins with a brief history of Safaricom and discusses its vision, strategic analysis, and segmentation using the STP model. It then defines marketing and explores Safaricom's marketing mix using the 7Ps and 4Cs frameworks. The document examines Safaricom's products, the external environment through PESTLE analysis, competition using Porter's 5 forces, and future opportunities via Ansoff's matrix. It concludes with a disclaimer.
This document contains a strategic plan for Simaton Ltd, a real estate company in Kenya. It includes an introduction, executive summary, mission statement, proposed organizational chart, SWOT analysis, PESTEL analysis, strategic goals and objectives, key performance indicators, pricing conclusions. The SWOT analysis identifies strengths such as experienced directors, opportunities such as rising middle class demand, and threats such as economic slowdowns. The PESTEL analysis examines political, economic, social, technological, environmental and legal factors impacting the real estate industry in Kenya. The strategic plan provides a framework to guide Simaton Ltd's strategic decision making and growth.
Acca msa board role, directors duties and liabilitiesFred Mmbololo
This document provides an overview of a corporate governance training program module on board roles, directors' duties and liabilities. It discusses the board's key responsibilities in providing leadership, guiding strategy, overseeing management and ensuring proper controls. The duties of directors include acting within their powers, exercising duty of care and fulfilling fiduciary obligations. A case study on Chase Bank is presented to discuss how directors may fail to meet these duties.
Global growth is projected to be 3.4% in 2016 and 3.6% in 2017. Sub-Saharan Africa growth is projected to be 4.0% in 2016 and 4.7% in 2017, mainly due to declining commodity prices and demand from China. Kenya's growth is projected to be 6.0% in 2016 and 6.5% in 2017, supported by continued investment in infrastructure and improved agricultural productivity. The 2016/17 Kenya budget aims to consolidate gains for a prosperous Kenya through investing in key sectors like agriculture, energy, security, transport, and health while managing fiscal risks and gradually lowering the fiscal deficit.
IFRS changes from 2014 to 2018 were summarized, including new standards like IFRS 15 Revenue from Contracts with Customers effective 2017 and IFRS 9 Financial Instruments effective 2018. Major changes covered IAS 32, IAS 36, IFRS 10/12, IFRIC 21 Levies, annual improvements, and various amendments. The presentation provided a high-level overview of new requirements and effective dates for upcoming changes to IFRS.
Rank xerox business performance-from 2006 to 2015Fred Mmbololo
Xerox Corporation is a global document management company known for inventing photocopying. While it once dominated the market, its revenues and profits have declined in recent years. In 2015, Xerox reported total revenues of $18.2 billion, down 8% from the previous year. Its net income was $552 million, down 51% from 2014. Xerox has undertaken various restructuring efforts to optimize its portfolio, including selling its IT outsourcing business and reducing its involvement in certain government contracts. It aims to focus on growing service areas like managed print, production color printing, and healthcare analytics to improve performance.
This business plan proposes establishing a new dry cleaning service called Nadmar Dry Cleaners in Nakuru and Nyahururu, Kenya. The plan provides an executive summary, company description, services offered, market analysis, strategy and implementation summary, management summary, and financial plan. Key points include targeting working professionals who need convenient cleaning services, establishing competitive edges through door-to-door delivery and quality service, and projecting over 30% market share and profits over $7,500 in the first year. The plan evaluates competition, opportunities, and risks to the new business.
How MJ Global Leads the Packaging Industry.pdfMJ Global
MJ Global's success in staying ahead of the curve in the packaging industry is a testament to its dedication to innovation, sustainability, and customer-centricity. By embracing technological advancements, leading in eco-friendly solutions, collaborating with industry leaders, and adapting to evolving consumer preferences, MJ Global continues to set new standards in the packaging sector.
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
Understanding User Needs and Satisfying ThemAggregage
https://www.productmanagementtoday.com/frs/26903918/understanding-user-needs-and-satisfying-them
We know we want to create products which our customers find to be valuable. Whether we label it as customer-centric or product-led depends on how long we've been doing product management. There are three challenges we face when doing this. The obvious challenge is figuring out what our users need; the non-obvious challenges are in creating a shared understanding of those needs and in sensing if what we're doing is meeting those needs.
In this webinar, we won't focus on the research methods for discovering user-needs. We will focus on synthesis of the needs we discover, communication and alignment tools, and how we operationalize addressing those needs.
Industry expert Scott Sehlhorst will:
• Introduce a taxonomy for user goals with real world examples
• Present the Onion Diagram, a tool for contextualizing task-level goals
• Illustrate how customer journey maps capture activity-level and task-level goals
• Demonstrate the best approach to selection and prioritization of user-goals to address
• Highlight the crucial benchmarks, observable changes, in ensuring fulfillment of customer needs
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Tata Group Dials Taiwan for Its Chipmaking Ambition in Gujarat’s DholeraAvirahi City Dholera
The Tata Group, a titan of Indian industry, is making waves with its advanced talks with Taiwanese chipmakers Powerchip Semiconductor Manufacturing Corporation (PSMC) and UMC Group. The goal? Establishing a cutting-edge semiconductor fabrication unit (fab) in Dholera, Gujarat. This isn’t just any project; it’s a potential game changer for India’s chipmaking aspirations and a boon for investors seeking promising residential projects in dholera sir.
Visit : https://www.avirahi.com/blog/tata-group-dials-taiwan-for-its-chipmaking-ambition-in-gujarats-dholera/
Part 2 Deep Dive: Navigating the 2024 Slowdownjeffkluth1
Introduction
The global retail industry has weathered numerous storms, with the financial crisis of 2008 serving as a poignant reminder of the sector's resilience and adaptability. However, as we navigate the complex landscape of 2024, retailers face a unique set of challenges that demand innovative strategies and a fundamental shift in mindset. This white paper contrasts the impact of the 2008 recession on the retail sector with the current headwinds retailers are grappling with, while offering a comprehensive roadmap for success in this new paradigm.
Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...my Pandit
Dive into the steadfast world of the Taurus Zodiac Sign. Discover the grounded, stable, and logical nature of Taurus individuals, and explore their key personality traits, important dates, and horoscope insights. Learn how the determination and patience of the Taurus sign make them the rock-steady achievers and anchors of the zodiac.
B2B payments are rapidly changing. Find out the 5 key questions you need to be asking yourself to be sure you are mastering B2B payments today. Learn more at www.BlueSnap.com.
buy old yahoo accounts buy yahoo accountsSusan Laney
As a business owner, I understand the importance of having a strong online presence and leveraging various digital platforms to reach and engage with your target audience. One often overlooked yet highly valuable asset in this regard is the humble Yahoo account. While many may perceive Yahoo as a relic of the past, the truth is that these accounts still hold immense potential for businesses of all sizes.
Unveiling the Dynamic Personalities, Key Dates, and Horoscope Insights: Gemin...my Pandit
Explore the fascinating world of the Gemini Zodiac Sign. Discover the unique personality traits, key dates, and horoscope insights of Gemini individuals. Learn how their sociable, communicative nature and boundless curiosity make them the dynamic explorers of the zodiac. Dive into the duality of the Gemini sign and understand their intellectual and adventurous spirit.
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Structural Design Process: Step-by-Step Guide for BuildingsChandresh Chudasama
The structural design process is explained: Follow our step-by-step guide to understand building design intricacies and ensure structural integrity. Learn how to build wonderful buildings with the help of our detailed information. Learn how to create structures with durability and reliability and also gain insights on ways of managing structures.
Storytelling is an incredibly valuable tool to share data and information. To get the most impact from stories there are a number of key ingredients. These are based on science and human nature. Using these elements in a story you can deliver information impactfully, ensure action and drive change.
1. 1
Initial Public Offering (I.P.O)
1. Introduction
In an initial public offering (IPO), an entrepreneurial firm offers a portion of its shares to
the public or potential investors to meet its financing needs.
Certo, Daily, Dalton, (2001) suggests that: ‘an IPO represents an important transition
point in a firm’s development, since the firm moves from being privately held towards
being publicly held’. In the so-called “financing hierarchy” formulated in pecking-order
theory, the IPO appears to be a firm’s financing source after internal financing and debt
(Myers, 1984).
An underwriting fee paid to the underwriters as compensation is a direct cost of initial
public offerings (IPOs). Underwriters need to examine a new issue company, and
should ensure the fairness of the offer price and set a fair offer price to maintain their
reputational capital (Booth and Smith, 1986).
Consequently the underwriters of Pet.Com Company having accessed the company’s
present financial position and found it very weak, it would be unethical and would also
perhaps hurt their reputation in future if the stick on having a high stock price $24 per
share instead of that of $18 per share. For the I.P.O, it would be indeed prudent to
have a low stock price given its poor trading performance for the last three years and
being no evidence of it making significant profits in the future.
www.investor.gov/news-alerts/investor-bulletins/investor-bulletin-investing-ipo website
say in essence that:
“It is important to understand that the offering price is determined by a mix of
market conditions, analysis and negotiation. Competing interests affect the
2. 2
determination of the offering price. From the perspective of the company offering
its shares in the IPO, the higher the offering price, the more capital the company
can raise. The underwriters also have an interest in a high price not only to meet
the company’s objectives, but also because their compensation is typically a
percentage of the offering price”
Therefore from the scenario we can see why the underwriters want a high stock price,
this is certainly because they will be paid a percentage of the offering price thereby
translating into a high return as underscored by one of its members.
From the above calculation we indeed see that the issuing costs exceed the annual
revenue and the reason why the shares will be issued at a low stock price.
Number of shares Fraction
Shareholders 1,500,000 2/3
Company 750,000 1/3
Total 2,250,000 1
Number of shares
Cost per
share Total
Share of
Company
Share of
Shareholders
Spread cost 1,250,000 1.25 1,562,500 520,833 1,041,667
Issue Costs 1,300,000 433,333.33 866,666.67
Total Cost 2,862,500 954,167 1,908,333
Total annual revenue 3,400,000
Profit on issue 537,500
3. 3
Suzuki (2008:98) emphasizes that:
“Since a manager with a high proportion of equity ownership has the incentive to
secure more financing through exaggerating corporate value to the underwriter,
underwriters incur greater expenses in examining such companies”
Thus, it’s evident that the shareholders of the company own two-thirds of the total
shares while the company owns the remaining one-third of the shares. The
shareholders will no doubt be asking for a high stock price of $24 and not $18.
On the other hand as the underwriters will have to undertake extra work to re-assess
the valuation of the company in general, it will only be natural for them to want a high
return in compensation and that’s why some of its members want a high stock price and
a high return consequently.
www.investor.gov/news-alerts/investor-bulletins/investor-bulletin-investing-ipo website
further highlights that:
“At the same time, the underwriters are responsible for selling the IPO and will
want a price that is attractive to the client-investors to whom they will be selling.
Underpricing an IPO creates a discount for the initial investors, increases the
demand for the IPO and helps the underwriters sell all of the available shares.
Underpricing may also affect how much, if at all, the stock’s price rises on its first
trading day. If there is a large increase, or “bump,” from the offering price during
the initial trading, the underwriter’s client-investors may be satisfied because the
value of their investment will have increased. However, the company may be
4. 4
unsatisfied in that case, as it might have been able to sell its shares at a higher
initial offering price and thereby raise more capital”.
In respect to the notion that the initial day’s return on an IPO should be considered part
of the issue costs, I feel that the financial manager views are fundamentally flawed and
that the underwriters are correct in that these are separate issues. However, I further
wish to inform the financial manager on what the additional issuing costs could be
incurred by the underwriters after the day of issue of the I.P.O.
In order to attach a fair offer price, they need to clarify the information within which the
company is hidden. Underwriters incur considerable expense in such an examination
(certification costs). As a result, IPO firms have to pay more for prestigious
underwriters because they will spend more on certification to protect their reputation.
Such a tendency is also revealed in the underwriter fee at the time of seasoned equity
offerings (SEOs) (Drucker and Puri, 2005).
Furthermore, underwriters monitor the post-issue operations of a newly issued
company (Easterbrook, 1984). The costs of this monitoring affect underwriter
compensation in SEOs (Hansen and Torregrosa, 1992a). Moreover, the costs of
certification and monitoring are influenced by the ownership structure of the IPO
firms.
Jensen and Meckling (1976) opine that:
“Issuers with higher levels of managerial ownership incur lower agency costs.
Such issuers achieve better performance by taking action that gives higher
priority to its profits than to a manager’s private benefits, and they will reduce the
5. 5
need for investment bank monitoring. Therefore, underwriters may charge lower
fees for issuers with a high level of managerial ownership”
However, Pet.Com company seems a small company with three shareholders and a
financial manager thus the issue of principal-agency will not be that serious hence the
underwriters could charge them much lower issuing fees.
Hansen and Torregrosa (1992b) argue that:
“underwriters play a monitoring role in reducing agency costs and in improving
corporate performance within SEOs. As agency problems become aggravated,
issuers require investment bank monitoring. Consequently, underwriters charge a
higher underwriter spread for issuers with serious agency problems to cover
monitoring costs”.
It is possible that the underwriters of Pet.Com will have to monitor the company
situation to see if it turns into to be a profitable venture given that customers and
investors could pump the required cash to revamp its operations.
Jain and Kini (1999) argue that ‘the certification role of the underwriter ends at the time
of the IPO, while the monitoring function begins during the post-IPO period’.
It is possible that certification and monitoring costs paid by underwriters become so
high that the asymmetric information problems between issuers and underwriters
become serious. To avert this problem probably Pet.Com Company would need to be
charged more issuing fees by the underwriters.
6. 6
The danger of overpricing is also an important consideration. If a stock is offered to the
public at a higher price than the market will pay, the underwriters may have trouble
meeting their commitments to sell shares. Even if they sell all of the issued shares, the
stock may fall in value on the first day of trading. If so, the stock may lose its
marketability and hence even more of its value. This could result in losses for investors,
many of whom being the most favored clients of the underwriters. Thus, the underwriter
should attempt to determine an appropriate price that is neither too high nor too low for
the Pet.Com Company.
IPO underpricing, which refers to stock returns experienced during the initial trading day
in the secondary market, reduces the capital received by an IPO firm through the IPO
process (Lin and Chuang, 2011).
Rock (1986) suggests that:
“Underpricing occurs because of information asymmetry between issuers and
potential investors; hence a discount price is offered to attract investors. He
further argues that this information asymmetry leads to the so-called “winner’s
curse”, since informed investors will compete for “good” issues, leaving
uninformed investors exposed to higher probability of obtaining “bad” issues”.
Beatty and Ritter (1986) indicate that ‘a higher level of underpricing belongs to firms that
have more uncertainties’. ‘As such, IPO firms that are subject to more asymmetric
information will need a greater degree of underpricing’ (Johnston and Madura, 2009)
7. 7
In the case of Pet.Com company it has been racking up sizeable losses for the last
three years implying that it faces uncertainties concerning its future profitability therefore
a low stock price would be appropriate.
Chen and Strange, (2004), however, explain that Rock’s adverse-selection model face
challenges due to unclear division between uninformed investors, as well as the
pervasiveness of oversubscription in IPOs across markets.
Perhaps the Pet.Com company after-all will not get affected by the distinction between
who are the uninformed and informed investors therefore they will be better off charging
a high stock price, in fact from the scenario its regarded by investors as one of the
hottest new e-commerce businesses and the news of the company going public
generated a lot of considerable excitement.
Leland and Pyle, (1977) using the signaling theory postulates that:
“Due to information asymmetry existing between the issuer and the potential
investors firms send signals to demonstrate their superior quality. Equity
retention by original shareholders can be regarded as a good signal of firm value
to potential investors, because principal-agent conflicts that may arise when the
ownership of a firm is dispersed can be minimized”.
In the case of Pet.Com Company it’s evident that the existing shareholders were selling
part of their holding, therefore sending signals to the new investors that the company
may be experiencing uncertainties like liquidity or profitability and hence will only be
willing to pay a low stock price. Therefore I would advise the financial manager that
principal-agent conflicts arising would make the company less attractive to the new
investors and they will only be willing to pay a low stock price.
8. 8
Allen and Faulhaber (1998) further extend the work of Leland and Pyle and propose
that:
“Firms tend to underprice their shares in IPOs as a signal of superior quality to
potential investors. Through a discount of its offer price in an IPO, an issuer
indicates that its financial position is sound and losses incurred from underpricing
can be recovered”.
It would be unwise for Pet.Com Company to underprice their I.P.O in anticipation that
the losses incurred will be recouped in future. The company has made sizeable losses
for the last three years and there is nothing extra-ordinary to infer that it will make profits
in the near future as categorically the company does not have a sound financial
position.
Garfinkel (1993), furthermore contend that:
“High-quality IPO firms generally have favorable private information regarding
their prospects, which may be revealed in the future. To communicate their high
quality to potential investors, they may perform certain strategies, including
setting a low offer price”.
Once again, it will be naïve for the financial manager to believe that their company
Pet.Com would move drastically from a company making sizeable losses to one that
makes sizeable profits. Therefore in the same vein the company should capitalize on
their business being one of the hottest businesses and insist on a issuing a high stock
price for the I.P.O
9. 9
Stoughton and Zechner (1998) in contrast suggest that managers may choose to
allocate a high proportion of shares to a single investor to encourage better monitoring,
thereby enhancing firm value. A low price may be offered to attract potential large
investors.
Therefore if Pet.Com strategy would be to control the potential monitoring of the firm
then to avoid a new large shareholding that enables effective monitoring on the firm, the
financial manager would be better off to have a low stock price that allows over
subscription, so that the share allocation can be rationed and discriminated.
A high stock price would enable a new shareholding to buy all the shares and effectively
monitor and control Pet.Com making the three previous shareholders irrelevant when it
comes to making key decisions in the company and this may jeopardize their status that
they currently enjoy in the company
Other signals used by I.P.O firms to convey information on their high quality include the
reputation of the external auditor (Titman and Trueman, 1986) or the reputation of the
investment banker (Carter, Dark, Singh, 1998)
Therefore if Pet.Com underwriters are a high reputable firm then its member comments
‘that underwriters want to see a high return and high stock price’ would be appropriate
that is to ask for a high stock price as new investors would have confidence with them
and would be willing to splash their money on the I.P.O despite the high stock price.
Regarding the concern whether the issue price would matter for Pet.com company, if
they had not planned to sell, here I feel that the financial manager is misinformed and
lacking some information which is elaborated further in the following website.
10. 10
www.investor.gov/news-alerts/investor-bulletins/investor-bulletin-investing-ipo website
states that
“All of the foregoing factor into the determination of the offering price. Whether
you have an opportunity to participate directly in an IPO or are buying shares in
the open market, it is important to realize that the offering price reflects a
negotiated estimate as to the value of the company. The offering price may bear
little relationship to the trading price of the securities, and it is not uncommon for
the closing price of the shares shortly after the IPO to be well above or below the
offering price”
“In addition, purchasing shares in the market immediately following an IPO
can be risky. Underwriters can support the trading price of the new issue
in its first few days of trading with certain trading activities, including
purchasing shares of the company. This is often done to keep the trading
price from falling too far below the offering price. Once this support ends,
the stock price may decline significantly below the offering price”
The above information from the website indicates that the issue price is not
affected by Pet.Com company decision to sell because the offering price only
reflects a negotiated estimate as to the value of the company determined
primarily by the underwriters and various market forces at that point in time.
11. 11
Conclusions
Jones and Swaleheen (2008) reckon that:
“Given that underwriters are compensated based on a percentage of the
proceeds they raise for the issuer, it would seem that the underwriter would want
to underprice the issue as little as possible (i.e. rise as much proceeds as
possible). However, firms that are able to secure a more reputable underwriter
are more likely to be in greater demand at the time of their I.P.O and are thus
more likely to have higher initial returns”
Firstly, following the above line of argument the underwriters who are responsible for
the roadshow have indicated that a low price stock would be appropriate for the I.P.O as
they pointed out that indications from investors were not the same as firm orders, they
further argue that it was more important to have a successful issue than to have a group
of disgruntled shareholders. Thus have a suggested the low stock price of $18 and not
$24. That why they too will be pleased as they will raise as much proceeds as possible
perhaps through oversubscriptions involving many shareholders.
Secondly and to sum up, it appears that the Pet.com company underwriters are not a
reputable firm and that’s why they are not insisting on a higher stock price. I feel that if
they were truly a highly reputable firm they should ask for a higher stock price but on the
other hand perhaps they are a reputable firm who know that Pet.com company has
made size-able losses in the last three years and is likely to continue making losses and
hence they are playing it safe be asking for low stock price while at the same time
protecting their reputation.
12. 12
References:
Journals
1. Allen, F. and Faulhaber, G.R. (1989), “Signaling by underpricing in the IPO market”,
Journal of Financial Economics, Vol. 23 No. 2, pp. 303-23.
2. Beatty, R.P. and Ritter, J.R. (1986), “Investment banking, reputation, and the
underpricing of initial public offerings”, Journal of Financial Economics, Vol. 15 Nos
1/2, pp.
3. Booth, J. and Smith, R. (1986), “Capital raising, underwriting, and the certification
hypothesis”, Journal of Financial Economics, Vol. 15 Nos 1-2, pp. 261-81.
4. Carter, R.B., Dark, F.H. and Singh, A.K. (1998), “Underwriter reputation, initial
returns, and long-run performance of IPO stocks”, The Journal of Finance, Vol. 53
No. 1, pp. 285-311.
5. Certo, S.T., Daily, C.M. and Dalton, D.R. (2001), “Signaling firm value through board
structure: an investigation of initial public offerings”, Entrepreneurship Theory &
Practice, Vol. 26, pp. 33-50. (J)
6. Easterbrook, F. (1984), “Two agency-cost explanations of dividends”, American
Economic Review, Vol. 74 No. 4, pp. 650-9.
7. Hansen, R. and Torregrosa, P. (1992a), “Underwriter compensation and corporate
monitoring”, Journal of Finance, Vol. 47 No. 4, pp. 1537-55.
8. Hansen, R. and Torregrosa, P. (1992b), “Underwriter compensation and corporate
monitoring”, Journal of Finance, Vol. 47 No. 4, pp. 1537-55.
13. 13
9. Jain, B. and Kini, O. (1999), “On investment banker monitoring in the new issues
market”, Journal of Banking and Finance, Vol. 23 No. 1, pp. 49-84.
10.Jensen, M. and Meckling, W. (1976), “Theory of the firm: managerial behavior,
agency costs and ownership structure”, Journal of Financial Economics, Vol. 3 No.
4, pp. 305-60.
11.Garfinkel, J.A. (1993), “IPO underpricing, insider selling and subsequent equity
offerings: is underpricing a signal of quality?”, Financial Management, Vol. 22 No. 1,
pp. 74-83.
12.Myers, R. (1984), “The capital structure puzzle”, The Journal of Finance, Vol. 39 No.
3, pp. 575-92
13.Lin, C.P. and Chuang, C.M. (2011), “Principal-principal conflicts and IPO pricing in
an emerging economy”, Corporate Governance: An International Review, Vol. 19
No. 6, pp. 585-600.
14.Johnston, J. and Madura, J. (2009), “The pricing of IPOs post-Sarbanes-Oxley”, The
Financial Review, Vol. 44 No. 2, pp. 291-310.
15.Rock, K. (1986), “Why new issues are underpriced”, Journal of Financial Economics,
Vol. 15 Nos 1/2, pp. 187-212.
16.Suzuki, K (2008), “Ownership Structure and underwriter spread”: Evidence from
Japanese I.P.O firms, International Journal of Managerial Finance, Vol No. 2, 2008
pp.96-111
17.Titman, S. and Trueman, B. (1986), “Information quality and the valuation of new
issues”, Journal of Accounting and Economics, Vol. 8 No. 2, pp. 159-72.
14. 14
18.Jones, T and Swaleheen, M (2010), “Endogenous examination of underwriter
reputation and IPO returns”, International Journal of Managerial Finance: Vol.36, No.
4, 2010 pp.284-293
Internet Articles
19. http://www.investor.gov/news-alerts/investor-bulletins/investor-bulletin-investing-ipo
website accessed on the 28th
, November 2013
Paper
20.Chen, J. and Strange, R. (2004), The Effect of Ownership Structure on the
Underpricing of Initial Public Offerings: Evidence from Chinese Stock Markets,
working paper, King’s College London, London, April. (Paper)