Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

3. International Company is a global leader in telephone, data, wireless, and wire-line solutions for the Internet. In July 2010, International Company announced a stock

image text in transcribed

3. International Company is a global leader in telephone, data, wireless, and wire-line solutions for the Internet. In July 2010, International Company announced a stock dividend and a 2- for-1 stock split. In January, and again in May 2011, International Company announced two more 2-for-1 stock splits. International Company's common shares now number 3 billion. From 2010 to 2011 International company's revenue grew by 40%. Its share price ranged from $20 to $123. Interestingly, its earnings (loss) per share was only ($0.95) in fiscal 2011 and ($0.15) in fiscal 2010. Its dividend yield is less than 1%. Required: (a) Explain the different effects that a stock dividend and stock split would have on International Company's financial position and number of shares. (b) Why do you think the company has split its common shares so often over the past few years? (c) The company reported a loss per share in both 2010 and 2011, yet its market price per share was positive and increasing. Can you explain why investors might be willing to pay an increasing price for the company's shares despite it poor performance and low dividend yield? 3. International Company is a global leader in telephone, data, wireless, and wire-line solutions for the Internet. In July 2010, International Company announced a stock dividend and a 2- for-1 stock split. In January, and again in May 2011, International Company announced two more 2-for-1 stock splits. International Company's common shares now number 3 billion. From 2010 to 2011 International company's revenue grew by 40%. Its share price ranged from $20 to $123. Interestingly, its earnings (loss) per share was only ($0.95) in fiscal 2011 and ($0.15) in fiscal 2010. Its dividend yield is less than 1%. Required: (a) Explain the different effects that a stock dividend and stock split would have on International Company's financial position and number of shares. (b) Why do you think the company has split its common shares so often over the past few years? (c) The company reported a loss per share in both 2010 and 2011, yet its market price per share was positive and increasing. Can you explain why investors might be willing to pay an increasing price for the company's shares despite it poor performance and low dividend yield

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Money Banking And Financial Markets

Authors: Stephen G. Cecchetti

2nd International Edition

0071287728, 9780071287722

More Books

Students also viewed these Finance questions

Question

Roll out international HRM practices for franchisees.

Answered: 1 week ago