- 15 Marks
FM – May 2023 – L3 – Q6 – Dividend Policy
Evaluate the comments in Neko Plc's annual report regarding dividend policy, share price, cost reduction, and tax minimization strategies.
Question
Neko Plc has issued the following statement as part of its annual report:
“This company aims at all times to serve its shareholders by paying a high level of dividends and adopting strategies that will increase the company’s share price. Satisfying our shareholders will ensure our success. The company will reduce costs by manufacturing overseas wherever possible and will attempt to minimize the company’s global tax bill by using tax haven facilities.”
Required:
a. Discuss the validity and implications of each of the comments and strategies in the above statement. (10 Marks)
b. Produce a short note outlining how the company should estimate its dividend capacity. (5 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Cost Minimization, Dividend Capacity, Shareholder Value, Tax Haven Strategies
- Level: Level 3
- Topic: Dividend Policy
Report an error