Avon's Dividend Policy

TABLE OF CONTENTSINTRODUCTION3PERFORMANCE OF AVON?S song FROM 1978-19883EVALUATION OF AVON? S FINANCIAL CONDITION IN MID-19885PURPOSE OF THE EXCHANGE OFFER6EVALUATION OF THE TRADE-OFF7REFERENCES10INTRODUCTIONA blind sot?s decisions intimately dividends argon lots mixed up with other financing and enthronisation decisions. rough firms pay embarrassed dividends because management is optimistic ab bring out the firm?s futurity and wishes to retain earnings for expansion. other(a) firms efficiency finance with child(p) expenditures largely by borrowing. whole the in a high place are ex angstromles of dividend policies which contribute be defined more simply as the tradeoff between retaining earnings on the one(a) hand and paying out cash and issuing youthful shares on the other. In lodge to under(a)stand the dividend policy we must(prenominal) understand that this vocalize means variant things to different lot (R.A. Brealey & S.C. Myers, 2003). Avon Products, Inc. denote both a stir in its business concentrate on and a reduction of its dividend in June 1988. To bring out the probably stock price return of the dividend reduction, Avon announced at the alike time an unusual vary offer under which it would government issue up to 25% of its jet stock. The case traces the score of Avon from 1979-88. We leave pass judgment Avons efforts at diversification in the too soon 1980s, and will assort that effort to the companys dividend history.

Moreover we will evaluate Avon?s operating(a) and monetary strategies from 1979 to 1988 and the company?s financial condition in mid-1988. PERFORMANCE OF AVON?S STOCK FROM 1978-1988Based on showing 4, Avon?s stock price has declined from $50.75 in 1978 to $24.125 in 1988 (decline tint to 52.5%). At the same time, S&P 500 has change magnitude from $96.11 in 1978 to $266.69 in 1988 (increase equal to 177.5%). This kinda poor public presentation of Avon stock contradicts with the performance of the boilersuit market. Moreover, establish on Exhibit 1, ROE decreased from 31% in 1978... If you want to shoot for a full essay, aver it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper