Reading 42: Discounted Dividend Valuation-LOS j 习题精选 likely, business, following, face, 2011

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Session 11: Equity Valuation: Industry and Company Analysis in a Global Context
Reading 42: Discounted Dividend Valuation

LOS j: Explain the growth phase, transitional phase, and maturity phase of a business.

 

 

In which of the following stages is a firm most likely to distribute the highest proportion of its earnings in the form of dividends?

A) Mature stage.

B) Transition stage.

C) Initial growth stage.

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As a firm matures, the forces of competition begin to deny it opportunities to earn greater than the required return. Faced with this situation, most earnings are distributed to shareholders as dividends. An alternate way of returning capital is through stock repurchases.

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In what stage of growth would a firm most likely NOT pay dividends?

A) Transition stage.

B) Initial growth stage.

C) Declining stage.

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During the initial growth stage, the firm is able to exploit opportunities to earn greater than the required return. During this stage, earnings are reinvested in the growth opportunities rather than returned to the investors.

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Most firms follow a pattern of growth that includes several stages. The second stage of growth is referred to as the:

A) H-stage.

B) mature stage.

C) transitional stage.

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The second stage is often referred to as the transitional stage. During this stage, the firm’s growth begins to slow as competitive forces build.