Please research on Yahoo Fiance page and Apple company website and find Apple compnay's dividend policy. Please answer: Is their dividend policy consistent with corporate finance theories on dividends distributions?and also consistent with their actions (i..e, the actual pattern of dividend payments? Why or why not? Do you think that their dividend policy is 'optimal' or not? Please explain why or why not?

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Bunny GreenfelderLv2

12 Aug 2019

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Integrated Waveguide Technologies, Inc. (IWT) is a 6 year old company founded by Hunt Jackson and David Smithfield to exploit metamaterial plasmonic technology to develop and manufacture miniature microwave frequency directional transmitters and receivers for use in mobile internet and communication applications. IWTâs technology, although highly advanced, is relatively inexpensive to implement, and its patented manufacturing techniques requires little capital as compared to many electronic fabrication ventures. Because of the low capital requirement, Jackson and Smithfield has been able to avoid issuing new stock and thus own all of the shares. Because of the explosion in demand for its mobile internet applications, IWT must now access outside equity capital to fund its growth, and Jackson and Smithfield have paid themselves reasonable salaries but routinely reinvested all after-tax earnings in the firm, so dividend policy has not been an issue. However, before talking with potential outside investors, they must decide on a dividend policy. Your new boss at the consulting firm Flick and Associates, which has been retained to help IWT prepare for its public offering, has asked you to make a presentation to Jackson and Smithfield in which you review the theory of dividend policy and discuss the following issues. a. (1) What is meant by the term âdistribution policyâ? How has the mix of dividend payouts and stock repurchases changed over time?(2) The terms âirrelevance,â âdividend preference, or bird-in-the-hand,â and âtax effectâ have been used to describe three major theories regarding the way dividend payouts affect a firmâs value. Explain what these terms mean, and briefly describe each theory. (3) What do the three theories indicate regarding the actions management should take with respect to dividend payouts? (4) What results have empirical studies of the dividend theories produced? How does all this affect what we can tell managers about dividend payouts? b. Discuss (1) the information content, or signaling, hypothesis, (2) the clientele effect, and (3) their effects on distribution policy. c. (1) Assume that SSC has completed its IPO and has a $112.5 million capital budget planned for the coming year. You have determined that its present capital structure (80% equity and 20% debt) is optimal, and its net income is forecasted at $140 million. Use the residual distribution approach to determine SSCâs total dollar distribution. Assume for now that the distribution is in the form of a dividend. Suppose SSC has 100 million shares of stock outstanding. What is the forecasted dividend payout ratio? What is the forecasted dividend per share? What would happen to the payout ratio and DPS if net income were forecasted to decrease to $90 million? To increase to $160 million? (2) In general terms, how would a change in investment opportunities affect the payout ratio under the residual distribution policy? (3) What are the advantages and disadvantages of the residual policy? (Hint: Donât neglect signaling and clientele effects.) d. (1) Describe the procedures a company follows when it make a distribution through dividend payments. (2) What is a stock repurchase? Describe the procedures a company follows when it make a distribution through a stock repurchase. e. Discuss the advantages and disadvantages of a firm repurchasing its own shares.

a. (1) What is meant by the term âdistribution policyâ? How has the mix of dividend payouts and stock repurchases changed over time?(2) The terms âirrelevance,â âdividend preference, or bird-in-the-hand,â and âtax effectâ have been used to describe three major theories regarding the way dividend payouts affect a firmâs value. Explain what these terms mean, and briefly describe each theory. (3) What do the three theories indicate regarding the actions management should take with respect to dividend payouts? (4) What results have empirical studies of the dividend theories produced? How does all this affect what we can tell managers about dividend payouts?

b. Discuss (1) the information content, or signaling, hypothesis, (2) the clientele effect, and (3) their effects on distribution policy.

c. (1) Assume that SSC has completed its IPO and has a $112.5 million capital budget planned for the coming year. You have determined that its present capital structure (80% equity and 20% debt) is optimal, and its net income is forecasted at $140 million. Use the residual distribution approach to determine SSCâs total dollar distribution. Assume for now that the distribution is in the form of a dividend. Suppose SSC has 100 million shares of stock outstanding. What is the forecasted dividend payout ratio? What is the forecasted dividend per share? What would happen to the payout ratio and DPS if net income were forecasted to decrease to $90 million? To increase to $160 million? (2) In general terms, how would a change in investment opportunities affect the payout ratio under the residual distribution policy? (3) What are the advantages and disadvantages of the residual policy? (Hint: Donât neglect signaling and clientele effects.)

d. (1) Describe the procedures a company follows when it make a distribution through dividend payments. (2) What is a stock repurchase? Describe the procedures a company follows when it make a distribution through a stock repurchase.

e. Discuss the advantages and disadvantages of a firm repurchasing its own shares.

PLEASE ANSWER AS MANY QUESTIONS AS POSSIBLE

13. Apple, Inc. reported last week that its balance sheet cash at March 31, 2017 now exceeds an astonishing $257 billion, more than the entire annual economic output of many countries, including Chile, Pakistan and Finland. Please read the following disclosure from Apple in conjunction with its Q1 2017 earnings release and explain 1) whether you think the magnitude of this return of capital plan is satisfactory from a shareholder perspective and 2) why do you think Apple needs to "access the domestic and international debt markets to assist in funding the program"?

Apple announced that its Board of Directors has authorized an increase of $50 billion to the Companyâs program to return capital to shareholders. Under the expanded program, Apple plans to spend a cumulative total of $300 billion by the end of March 2019.

âWe generated strong operating cash flow of $12.5 billion and returned over $10 billion to our investors in the March quarter,â said Luca Maestri, Appleâs CFO. âGiven the strength of our business and our confidence in our future, we are happy to announce another $50 billion increase to our capital return program today.â

As part of the latest update to the program, the Board has increased its share repurchase authorization to $210 billion from the $175 billion level announced a year ago.

The Board has approved a 10.5% increase to the Companyâs quarterly dividend, and has declared a dividend of $0.63 per share of the Companyâs common stock, payable on May 18, 2017 to shareholders of record as of the close of business on May 15, 2017.

From the inception of its capital return program in August 2012 through March 2017, Apple has returned over $211 billion to shareholders, including $151 billion in share repurchases.

The Company plans to continue to access the domestic and international debt markets to assist in funding the program.

14. Refer to Facebook's Q1 2017 investor press release here: https://investor.fb.com/investor-news/press-release-details/2017/Facebook-Reports-First-Quarter-2017-Results/default.aspx (Links to an external site.)Links to an external site.

e. What is Facebook's current market capitalization and enterprise value using a market price of $150 per FB share?

f. Provide Facebook's EV/adjusted EBITDA and P/E ratios using $150 per FB share.

g. Hypothetically, let's say Facebook has an agreement to buy Pandora at $14 per P share, or about $3.5 billion. How would you recommend to the Facebook CFO as to how to finance (pay for) the acquisition and why?

h. Do you think that there is another company on the planet with a more impressive set of financial statements than Facebook?