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Gainesboro Machine Tools Corporation

Gainesboro Machine Tools Corporation. 陳柏誠、呂建輝 、顏瑞甫、黃致嘉、端木偉葶、 戴肇逸. Agenda. Background(1/2). In mid-September 2005, Ashley Swenson, CFO of Gainesboro Machine Tools Corporation needed to decide the company’s dividend policy

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Gainesboro Machine Tools Corporation

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  1. Gainesboro Machine Tools Corporation 陳柏誠、呂建輝、顏瑞甫、黃致嘉、端木偉葶、 戴肇逸

  2. Agenda

  3. Background(1/2) • In mid-September 2005, Ashley Swenson, CFO of Gainesboro Machine Tools Corporation needed to decide the company’s dividend policy • After Hurricane Katrina , the stock market had spiraled downward and Gainesboro’s stock had fallen 18%, to $22.15 Despite the loss, the board declared a small dividend Dividends decreased to a level below earnings Dividends had exceeded earnings from 2000~2002 No dividends for the first two quarters , but the board committed to pay the dividend in 2005.

  4. Background(2/2) • Which dividend policy would be better? • Zero-dividend payout • 40% dividend payout or a dividend of around $0.2 a share • Residual-dividend payout • Buyback

  5. Gainesboro Corporate Goal 15% Compound Sales Growth

  6. Stockholder Comparative Data, 1994 and 2004 Individual investors Institutional investors • Family own 13% of the company’s stock ,and support Artificial Workforce project • Value-oriented institutional investors has increased, while growth-oriented has dropped. • Long-term investor has decreased from 37% to 26%, while short-term investor has increased from 5% to 13%. Andthe percentage of other/unknown was increased from 4% to 12%.

  7. Gainesboro has already borrowed too much money • Beyond40%debt-toequityratiois“unthinkable”, quoted by Gainesboro co-founder David Scarboro • Gainesboro’s highest debt-to-capital ratio in the past 25 years occurred in 2004

  8. Solution

  9. Conclusion • Strategy: • Image Advertisement;2. Name change

  10. Thank for your listening Q&A

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