Stock repurchases is better than an extra cash dividend. Introduction: A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.

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Chapter 14.3, Problem 14.3ACQ

Summary Introduction

To discuss: Stock repurchases is better than an extra cash dividend.

Introduction:

A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.

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Free Cash Flow Use the financial statements shown here for Lan & Chen Technologies. The federal-plus-state tax rate is 25%. Lan & Chen Technologies: Income Statements for Year Ending December 31 (Thousands of Dollars) 2023 2022 Sales $960,000 $900,000 Expenses excluding depreciation and amortization 820,000 774,000 EBITDA $140,000 $126,000 Depreciation and amortization 33,000 31,500 EBIT $107,000 $94,500 Interest Expense 10,000 8,900 EBT $97,000 $85,600 Taxes (25%) 24,250 21,400 Net income $72,750 $64,200 Common dividends $43,000 $41,230 Addition to retained earnings $29,750 $22,970 Lan & Chen Technologies: December 31 Balance Sheets (Thousands of Dollars) Assets 2023 2022 Cash and cash equivalents $48,250 $45,000 Short-term investments 3,200 3,600 Accounts Receivable 280,500 270,000 Inventories 141,000 135,000 Total current assets $472,950 $453,600 Net fixed assets 360,750 315,000 Total assets…

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Answer 2

Question

Chapter 14.3, Problem 14.3ACQ

Summary Introduction

To discuss: Stock repurchases is better than an extra cash dividend.

Introduction:

A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.

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Answer 3

Question

Chapter 14.3, Problem 14.3ACQ

Summary Introduction

To discuss: Stock repurchases is better than an extra cash dividend.

Introduction:

A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.

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Answer 4

Question

Chapter 14.3, Problem 14.3ACQ

Summary Introduction

To discuss: Stock repurchases is better than an extra cash dividend.

Introduction:

A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.

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Answer 5

Chapter 14.3, Problem 14.3ACQ

Summary Introduction

To discuss: Stock repurchases is better than an extra cash dividend.

Introduction:

A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.

Answer 6

Chapter 14.3, Problem 14.3ACQ

Summary Introduction

To discuss: Stock repurchases is better than an extra cash dividend.

Introduction:

A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.

Answer 7

Chapter 14.3, Problem 14.3ACQ

Summary Introduction

To discuss: Stock repurchases is better than an extra cash dividend.

Introduction:

A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.

Answer 8

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Answer 10

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Answer 11

Ch. 14.1 - Prob. 14.1ACQ Ch. 14.1 - Prob. 14.1BCQ Ch. 14.1 - Prob. 14.1CCQ Ch. 14.2 - Prob. 14.2ACQ Ch. 14.2 - Prob. 14.2BCQ Ch. 14.2 - Prob. 14.2CCQ Ch. 14.3 - Prob. 14.3ACQ Ch. 14.3 - Prob. 14.3BCQ Ch. 14.5 - Prob. 14.5ACQ Ch. 14.5 - Prob. 14.5BCQ

Stock repurchases is better than an extra cash dividend. Introduction: A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.

Solution Summary: The author explains that stock repurchases are better than cash dividends, since they can be reinvested for the sake of shareholders without any tax implication.

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To discuss: Stock repurchases is better than an extra cash dividend.

Introduction:

A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.

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Chapter 14 Solutions

Stock repurchases is better than an extra cash dividend. Introduction: A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.

Solution Summary: The author explains that stock repurchases are better than cash dividends, since they can be reinvested for the sake of shareholders without any tax implication.

Concept explainers

Videos

To discuss: Stock repurchases is better than an extra cash dividend. Introduction: A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.

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Chapter 14 Solutions

To discuss: Stock repurchases is better than an extra cash dividend.

Introduction:

A company buys its own stock for an exchange of cash is termed as stock repurchase. The company buys back shares whereas cash dividend is the distribution of a portion of company’s earnings to the shareholders.