Question
A successful small-cap growth company, Technotronic Ltd, also operates in the technology industry. It has been generating regular earnings over the same period as Tech-Time,
- A successful small-cap growth company, Technotronic Ltd, also operates in the technology industry. It has been generating regular earnings over the same period as Tech-Time, but never pays any cash dividends.
bellow chart show regular earnings for Tech -Time ( Take these same periods for Technotronic Ltd company as well )
| 2014 | 2015 | 2016 | 2017 | 2018 | |
| EPS | $ 1.60 | $ 4.20 | $ 4.80 | 3.6 | 2 |
| DPS | $ 0.80 | $ 2.10 | $ 2.40 | $ 1.80 | $ 1.00 |
Explain this practise of notpaying cash dividends based on:
- the clientele effect (7 marks); AND
- dividend signalling theory (7 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Finance For Managers
Authors: Harvard Business School Press
1st Edition
1578518768, 978-1578518760
