- CFA Exams
- 2025 Level II
- Topic 4. Corporate Issuers
- Learning Module 16. Analysis of Dividends and Share Repurchases
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Learning Outcome Statements PDF Download
| 1. Dividends: Forms and Effects on Shareholder Wealth and Financial Ratios describe the expected effect of regular dividends, extra dividends, liquidating dividends, stock dividends, stock splits, and reverse stock splits on shareholders' wealth and a company's financial ratios; | |
| 2. Dividend Policy and Company Value: Theory compare theories of dividend policy and explain implications of each for share value given a description of a corporate dividend action; | |
| 3. Dividend Policy: Other Theoretical Issues describe types of information (signals) that dividend initiations, increases, decreases, and omissions may convey;
explain how agency costs may affect a company's payout policy; | |
| 4. Factors Affecting Dividend Policy explain factors that affect dividend policy in practice; calculate and interpret the effective tax rate on a given currency unit of corporate earnings under double taxation, dividend imputation, and split-rate tax systems; | |
| 5. Payout policies compare stable dividend with constant dividend payout ratio, and calculate the dividend under each policy; describe broad trends in corporate payout policies; | |
| 6. Share Repurchases, Methods and Financial Statement Effects compare share repurchase methods; calculate and compare the effect of a share repurchase on earnings per share when 1) the repurchase is financed with the company's surplus cash and 2) the company uses debt to finance the repurchase; calculate the effect of a share repurchase on book value per share; | |
| 7. The Dividend versus Share Repurchase Decision explain the choice between paying cash dividends and repurchasing shares; | |
| 8. Analysis of Dividend Safety calculate and interpret dividend coverage ratios based on 1) net income and 2) free cash flow; identify characteristics of companies that may not be able to sustain their cash dividend. |
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