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advantages of residual theory1 saving on floatation costsno require to raise debt or equity capital as there is high retention of earnings that
constant dps plus extra or surplus1 beneath this policy a constant dps is paid every year nonetheless extra dividends are paid in years of
constant amount per share or fixed dps1 the dps is fixed in total amount of irrespective of the earnings level these generate certainty and are
constant payout ratio1 this is whereas the firm will pay a fixed dividend rate as like 40 percent of earnings the dps would consequently fluctuate as
importance and solution of dividend decisionsdividends decisions are integral part of a firms strategic financing decision it is hence a plan of
dividend policies and decisionsdividend policy determines the division of earnings among payments to stock holders ad re-investment in the firm
example of valuation of bonds and debenturesk is contemplating purchasing a 3 year bond worth 40000 carrying a nominal coupon rate of interest of 10
asset based valuation - examplek and k company limited is planning to absorb three other companies so as to realize its sales records of sh500 000
example of asset based valuationextracted information from the books of kent limited current liabilitiesbank overdraft sh300000
asset based valuation this method acquires into account the entire business along with reference to its assets and then divides the resultant
example of dividend basis valuationcompany laxmi synthetics pays a dividend of 10 on its sh60 par value ordinary shares this company uses a
dividend basis valuationownership of shares in entities - the owner to obtain a cash flow consisting of future dividends and the value of a share
earnings method or earning basis valuationby using the earning valuation method a company will employ its pe ratio to value its sharespe
bases of share valuationshare valuation can be done on the basis of income and asset values on the basis of income still a share will be entitled to
valuation of sharea number of parties are interested however in the value of shares and securities and that will includecompany shareholders vendors
valuation of securitiesthe previous methods were perfect for valuing the entire business however it is also essential to ascertain the value of part
price earnings ratio valuationpe ratio is traditionally employed for valuation of shares however it is an important ratio in the valuation of
example of earnings yield valuationestimated maintainable earnings are pound240000 per annum rate of return required is 25 percentcalculate the value
earnings yield valuationey is given via the earnings made with the business expressed like a percentage of the market price of the business that
earning method - bases of valuationthe business is valued according to the net stream of income it is expected to create over its
example of theoretical valueas a result of the purchase of an asset the income stream will rise by of pound1000 per annum for 25 years by
valuation of businessa business may be valued for different type of reasons that as for merger acquisition or takeover or liquidation or outright
example of replacement of assetsestate developers purchased a machine five years ago on a cost of pound7500 the machine had a probable economic
pbp reciprocalpbp expresses the profitability of a project in terms of years it does not indicate any return as measure of investment the pbp
comparison between modern and traditional methods both modern and traditional methods will indicate or show strong weaknesses which like a company