Question

Number of Shares Outstanding (000's) 300

Share Price as of 12/31/2017 $11

Share Price as of 12/31/2016 $9

Tax Rate 40%

Total Dividends Paid In 2017 (000's) $ 60

Capital Expenditures in 2017 (000's) $70

Net Income 2016 $171

Net income 2017 $189

Sold old equipment for $20,000 with an original cost of $25,000 and A/D of $10,000

- Find total stakeholder return ( Dividends + SPA) for year ended 2016 and 2017

Answer 1

Total shareholder return (TSR) is intended to be he ultimate bottom line of investment performance. It measures the full returns earned by an investment over the period of ownership, including any dividend cashflows paid during that period.

Thus total shareholder return is the internal rate of return (IRR) of all cash flows paid to investors during a particular period.  

Shareholder Return (in absolute terms) = (Ending Market Value of Stock - Cost Basis of Stock) + Any Dividends Received + Any Other Cash Distributions Received + The Market Value of Any Shares Received in a Spin-Off + Any Dividends Received on Shares from the Spin-Off Stock + Any Other Cash Distributions Received from the Spun-Off Stock + The Market or Liquidation Value of Any Warrants Issued i.e Capital Gains + Dividends (Total shareholder return = (Stock price_{End of period} ? Stock price_{Start of period} + Dividends paid) ÷ Stock price_{Start of period)}

Year 2017 = (11-9+60)/9= $ 6.89

Year 2016= Cannot be calculated withgiven facts