SOUTHBORO CORPORATION Issue: Â Â Â Â Â Â Â Â What dividend policy should Southboro Corporation don in the long? Background: Southboro is a publicly-traded participation brainh 51% possess by public. It is currently quick in the sale of wienerwurst/CAM equipment (45% of total revenues), presses and molds (40% of total revenues), unhomogeneous machines (15%). The firm has just complete a restructuring of its operations in the face of declining sales and has hang up payment of dividends during the 1st semester of 1988. After arrange of the restructuring, the club is shifting decoct and is smell forward to wiretap the emerging CAD/CAM market. The confederation aims to derive 66% of its revenues in the next 5 long time from the CAD/CAM segment, and the remaining from presses and molds. With this strategy, the gild is forecasting an annual ontogenesis of 15% in sales. The Southboro semipermanent plan, however, is beset by critical business and economic conditions to wit: intensified competition with competitors judge to come up with a similar CAD/CAM applied science in the next 12 months, a highly rotary artificial workforce industry, a weakened US growth. The US economy faces decreased industrial production and consumer spending. With this, the telephoner is contemplating on determining dividend policy that would trump serve the interests of the stockholders but entrust not hamper the long-term plans of the high society.
Recommendations: The group recommends that a dividend be granted because dividend payment conveys a strong signal that the Company is benefiting from the restructuring that has taken place the prehistoric 2 years and is looking forward to a turn-around in operations. Further, the group deems it best that because stockholders ar holding on to their stocks in anticipation of dividend payments, it may submit down price if the Company decides to stop payment all-together. Over a long-term horizon, the group recommends that the... If you impoverishment to get a panoptic essay, order it on our website:
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