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

SOUTHBORO CORPORATION Issue:          What dividend policy should Southboro Corporation adopt in the long? Background: Southboro is a publicly-traded participation with 51% possess by public. It is currently active in the sale of domestic dog/CAM equipment (45% of total revenues), presses and molds (40% of total revenues), miscellaneous machines (15%). The firm has just stainless a restructuring of its operations in the face of declining sales and has hang remuneration of dividends during the 1st semester of 1988. After limit of the restructuring, the club is modify focus and is looking forward to pink the emerging weenie/CAM market. The telephoner aims to derive 66% of its revenues in the next 5 geezerhood from the wiener/CAM segment, and the remaining from presses and molds. With this strategy, the Company is forecasting an one-year growth of 15% in sales. The Southboro semipermanent plan, however, is beset by unfavorable business and economic c onditions to wit: intensified controversy with competitors expected to come up with a similar CAD/CAM technology in the next 12 months, a super cyclical artificial workforce industry, a weakened US growth. The US economy faces decreased industrial production and consumer spending. With this, the Company is contemplating on determining dividend policy that would outgo serve the interests of the stockholders notwithstanding will not hamper the long-term plans of the Company.

Recommendations: The group recommends that a dividend be granted because dividend payment conveys a strong emblem that the Company is benefiting from the restr ucturing that has taken place the prehistor! ical 2 years and is looking forward to a turn-around in operations. Further, the group deems it silk hat that because stockholders are holding on to their stocks in anticipation of dividend payments, it whitethorn drive down price if the Company decides to stop payment all-to lasther. Over a long-term horizon, the group recommends that the... If you indigence to get a full essay, order it on our website: BestEssayCheap.com

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