Question Three (20 Marks)

a) For each of the companies described below explain which one you would expect to have a medium, high or low dividend payout ratio.

A company with a large proportion of inside ownership, all of whom are high income individuals. (2 Marks)

A growth company with an abundance of good investment opportunities. (2 Marks)

A company experiencing ordinary growth, has high liquidity and much unused borrowing capacity. (2 Marks)

A dividend-paying company that experiences an unexpected drop in earnings from the trend. (2 Marks)

A company with volatile earnings and high business risk. (2 Marks)

b) Globalization has resulted in several organizations engaging in corporate alliances and the establishment of several trading blocks. The advent of e-commerce has enabled companies to greatly expand their markets.

Required:

Identify and elaborate on five (5) factors that complicate financial management in multi-national firms. (10 Marks)