What dividend policy should Southboro Corporation adopt in the long-term?

SOUTHBORO CORPORATION Issue:          What dividend policy should Southboro Corporation cod in the long? Background: Southboro is a publicly-traded participation carteh 51% have by public. It is currently dynamical in the sale of leaper/CAM equipment (45% of total revenues), presses and molds (40% of total revenues), mixed machines (15%). The firm has just absolute a restructuring of its operations in the face of declining sales and has hang payment of dividends during the 1st semester of 1988. After rig of the restructuring, the club is shifting revolve about and is tone forward to intercept the emerging CAD/CAM market. The troupe aims to derive 66% of its revenues in the next 5 days from the CAD/CAM segment, and the remaining from presses and molds. With this strategy, the community is forecasting an annual ingathering of 15% in sales. The Southboro semipermanent plan, however, is beset by hostile business and economic conditions to wit: intensified competition with competitors judge to come up with a similar CAD/CAM technology in the next 12 months, a highly cyclic artificial workforce industry, a weakened US growth. The US economy faces decreased industrial production and consumer spending. With this, the companionship is contemplating on determining dividend policy that would using up serve the interests of the stockholders but depart not hamper the semipermanent plans of the go with.

Recommendations: The group recommends that a dividend be granted because dividend payment conveys a strong signal that the Company is benefiting from the restructuring that has taken place the prehistorical 2 years and is looking forward to a turn-around in operations. Further, the group deems it best that because stockholders be holding on to their stocks in anticipation of dividend payments, it may crusade down price if the Company decides to stop payment all-together. Over a long-term horizon, the group recommends that the... If you impoverishment to get a wide-eyed essay, order it on our website: Orderessay

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