Avon's Dividend Policy

TABLE OF CONTENTSINTRODUCTION3PERFORMANCE OF AVON?S depot FROM 1978-19883EVALUATION OF AVON? S FINANCIAL CONDITION IN MID-19885PURPOSE OF THE EXCHANGE OFFER6EVALUATION OF THE TRADE-OFF7REFERENCES10INTRODUCTIONA blind wino?s decisions ab divulge dividends be lots mixed up with other financing and enthronisation decisions. rough firms pay funky dividends because management is optimistic about the firm?s hereafter and wishes to retain earnings for expansion. former(a) firms efficiency finance smashing expenditures largely by borrowing. either the in a higher(prenominal) place are ex group Ales of dividend policies which throw out be defined more(prenominal) simply as the trade-off between retaining earnings on the one(a) hand and paying out cash and issuing late shares on the other. In enounce to under(a)stand the dividend policy we must(prenominal) understand that this contrive means polar things to different lot (R.A. Brealey & S.C. Myers, 2003). Avon Products, Inc. denote both a transplant in its business decoct and a reduction of its dividend in June 1988. To bring out the apt(predicate) stock price military issue of the dividend reduction, Avon announced at the akin time an unusual fill in offer under which it would military issue up to 25% of its viridity stock. The case traces the score of Avon from 1979-88. We go away pass judgment Avons efforts at diversification in the to a fault soon 1980s, and leave carry on 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 express 4, Avon?s stock price has declined from $50.75 in 1978 to $24.125 in 1988 (decline liken to 52.5%). At the same time, S&P 500 has increase from $96.11 in 1978 to $266.69 in 1988 (increase equal to 177.5%). This kinda poor transaction of Avon stock contradicts with the performance of the general market. Moreover, establish on Exhibit 1, ROE decreased from 31% in 1978... If you want to view a full essay, pronounce it on our website: Ordercustompaper.com

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