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Learning Outcome Statements PDF Download
|1. Dividend policy and company value: theory|
a. compare theories of dividend policy and explain implications of each for share value given a description of a corporate dividend action;
b. describe types of information (signals) that dividend initiations, increases, decreases, and omissions may convey;
c. explain how clientele effects and agency issues may affect a company's payout policy;
|2. Factors affecting dividend policy|
d. explain factors that affect dividend policy;
e. 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;
|3. Payout policies|
f. compare stable dividend, constant dividend payout ratio, and residual dividend payout policies, and calculate the dividend under each policy;
g. explain the choice between paying cash dividends and repurchasing shares;
h. describe broad trends in corporate dividend policies;
|4. Analysis of dividend safety|
i. calculate and interpret dividend coverage ratios based on 1) net income and 2) free cash flow;
j. identify characteristics of companies that may not be able to sustain their cash dividend.