Many companies paid dividends in 20YY and these payouts were attributed to the large cash build-up...

Many companies paid dividends in 20YY and these payouts were attributed to the large cash build-up relative to the market values of many firms. Starbucks was an example of this phenomenon. After two years of poor performance and store closings, in the first quarter of 20YY, Starbucks announced its first dividend payout. They announced not only a 10 cent dividend per share but also announced they would begin to buy back their own shares. Most analysts believe Starbucks has passed the fast-growth stage and are entering a maturity period. What is Starbucks share repurchase and enhanced dividend saying about its future prospects?

Expert Solution

Starbucks share repurchase and enhanced dividend indicates that the company wants to presently reward its shareholders and give them back as much as possible. The company expects the future to be promising and its recent deal with Nestle is expected to be accretive to its earnings. Thus the company’s decision with regards to share repurchase and enhanced dividend is being guided by its positive outlook for the future and that alliances like that with Nestle will enhance its business prospects in future and give its earnings, top-line and bottom-line further traction. Further share repurchase will also help Starbucks to shore up its financial ratios like earnings per share (EPS).

Thus we can say that future prospects of Starbucks does appear bright and the recent decisions of the company to pay increased dividends and buyback its shares is just to reward the shareholders after two years of dismal financial performance. Analysts are most probably wrong in saying that Starbucks is entering a maturity period and deals like the Nestle deal will further augment and boost the company’s growth and financial performance in future, thus ensuring that high growth continues for some time in future.

jeff jeffy answered 7 months ago

a. Class, sometimes, companies are too large to break up. Many of these companies have exclusive...

a. Class, sometimes, companies are too large to break up. Many of these companies have exclusive access to resources that make the introduction of competition impossible. No more is this more apparent than in Canada’s oil sands. Class, please provide some recent statistics on this industry, such as revenues and profit levels. You can do this by researching news articles. Be sure to source where you got the information from. b. One of the issues surrounding the oil sands is...

Labels and Amount Descriptions Cash paid for dividends Cash paid for purchase of equipment Cash paid...

Labels and Amount Descriptions Cash paid for dividends Cash paid for purchase of equipment Cash paid for purchase of land Cash paid for purchase of treasury stock Cash payments for income taxes Cash payments for merchandise Cash payments for operating expenses Cash received from customers Cash received from sale of common stock Cash received from sale of investments Change in cash December 31, 20Y6 Depreciation For the Year Ended December 31, 20Y6 Gain on sale of investments Issuance of common...

Net income for the year was $117,000. Dividends of $114,000 cash were declared and paid. Scoreteck’s...

Net income for the year was $117,000. Dividends of $114,000 cash were declared and paid. Scoreteck’s only noncash expense was $87,000 of depreciation. The company purchased plant assets for $87,000 cash. Notes payable of $37,000 were issued for $37,000 cash. Complete the following spreadsheet in preparation of the statement of cash flows. (The statement of cash flows is not required.) Report operating activities under the indirect method. (Enter all amounts as positive values.) SCORETECK CORPORATION Spreadsheet for Statement of...

Cash dividends of $71,390 were declared during the year. Cash dividends payable were $10,752 at the...

Cash dividends of $71,390 were declared during the year. Cash dividends payable were $10,752 at the beginning of the year and $15,808 at the end of the year. The amount of cash for the payment of dividends during the year is a.$71,390 b.$60,638 c.$87,198 d.$66,334

Cash dividends of $50,000 were declared during the year. Cash dividends payable were $10,000 and $5,000...

Cash dividends of $50,000 were declared during the year. Cash dividends payable were $10,000 and $5,000 at the beginning and end of the year, respectively. The amount of cash for the payment of dividends during the year is A) $60,000 B) $50,00 C) $55,000 D) $65,000 ------------------------------------------------------- A company with 81,210 authorized shares of $7 par common stock issued 47,603 shares at $12 per share. Subsequently, the company declared a 2% stock dividend on a date when the market price...

Transaction 9 Cash dividends totaling $4,600 were paid to stockholders on March 31. Account: Cash Accounts Receivable...

Transaction 9 Cash dividends totaling $4,600 were paid to stockholders on March 31. Account: Cash Accounts Receivable Inventory Prepaid Rent Fixtures and Equipment Accounts Payable Interest Payable Wages Payable Notes Payable Paid-in Capital Retained Earnings Leave Blank Dollar amount: Account: Cash Accounts Receivable Inventory Prepaid Rent Fixtures and Equipment Accounts Payable Interest Payable Wages Payable Notes Payable Paid-in Capital Retained Earnings Leave Blank Dollar amount: Account: Cash Accounts Receivable Inventory Prepaid Rent Fixtures and Equipment Accounts Payable Interest Payable Wages Payable Notes Payable Paid-in Capital...

Prepare the 2018 cash flow statement for XYZ Corp. Assume no dividends were paid. Financial Statements...

Prepare the 2018 cash flow statement for XYZ Corp. Assume no dividends were paid. Financial Statements for XYZ Corp. Balance Sheet for Period Ending December 31. Assets 2017 2018 Cash and Marketable Securities 40 15 Accounts Receivable 160 80 Inventories 250 370 Total Current Assets 450 465 Gross Plant and Equipment 675 855 less: Accumulated Depreciation 250 300 Net Plant and Equipment 425 555 Total Assets 875 1020 Liabilities and Equity Accounts Payable 15 30 Short-term Bank Loans 35 40...

Common Stock (130,000 shares, $10 par) Cash dividends were paid at the rate of $1 per...

Common Stock (130,000 shares, $10 par) Cash dividends were paid at the rate of $1 per share in fiscal year 2014 and $2 per share in fiscal year 2015. Dividends for 2015 and 2014?

Oriole Company declared dividends of $19700 in fiscal 2021 and paid the $41000 dividends that were...

Oriole Company declared dividends of $19700 in fiscal 2021 and paid the $41000 dividends that were declared in fiscal 2020. Oriole paid the 2021 dividends in early fiscal 2022. Which of the following journal entries would NOT be recorded in fiscal 2021? debit to Dividends Payable and credit to Cash for $41000 debit to Retained Earnings and credit to Cash Dividends for $19700 debit to Dividends Payable and credit to Cash for $19700 debit to Cash Dividends and credit to...

Cash at beginning of period $74 Cash receipts from customers O+ 215 Dividends paid 12 Dividends...

Cash at beginning of period $74 Cash receipts from customers O+ 215 Dividends paid 12 Dividends received 9 Interest paid 7 Issuance of stocks 75 Loans made to borrowers 65 Payments of dividends 30 Payments to vendors and payroll 155 Proceeds from short-term borrowing 22 Purchase of land 35 Receipts of interest 10 Redemption of long term liabilities 80 Sale of building 26 Taxes paid 15 Please fill in codes: ) +, O -,I +, I-, F +, F- Calculate:...

Question