Chapter Summaries
16.1 Distinguish between the use of cash dividends and share repurchases. (pgs. 528–532)
Summary:
Cash dividends are typically paid quarterly and represent a direct payment of cash to each of the firm’s shareholders in direct proportion to the number of shares that she or he owns. Stock repurchases of the firm’s shares, on the other hand, are typically made in the open market and result in a cash inflow to the shareholders who sell their shares to the company. The shareholders who do not sell their shares end up with the same number of shares as before but with a higher ownership percentage, as the share repurchase reduces the total number of common shares that are outstanding.
Stock dividends and stock splits have the same ...
Get Financial Management: Principles and Applications, 13/e now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
