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CASE

CASE

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Published by: lee_syah on Feb 17, 2011
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12/07/2012

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CASE: Electronic Timing, Inc.

Electronic Timing, Inc. (ETI), is a small company founded 15 years ago by electronics engineers Tom Miller and Jessica Kerr. ETI manufactures integrated circuits to capitalize on the complex mixed-signal design technology and has recently entered the market for frequency timing generators, or silicon timing devices, which provide the timing signals or “clocks” necessary to synchronize electronic systems. Its clock products originally were used in PC video graphics applications, but the market subsequently expanded to include motherboards, PC peripheral devices, and other digital consumer electronic, such as digital television boxes and game consoles. ETI also designs and markets custom application-specific integrated circuits (ASICs) for industrial customers. The ASIC’s design combines analog and digital, or mixed-signal, technology. In addition to Tom and Jessica, Nolan Pittman, who provided capital for the company, is the third primary owner. Each owns 25 percent of the 1 million shares outstanding. Several other individuals, including current employees, own the remaining company shares. Recently, the company designed a new computer motherboard. The company’s design is both more efficient and less expensive to manufacture, and ETI design is expected to become standard in many personal computers. After investigating the possibility of manufacturing the motherboard, ETI determined that the cost involved in building a new plant would be prohibitive. The owners also decided to an outside that they were unwilling to bring in another large outside owner. Instead, ETI sold the design to an outside firm. The sale of the motherboard design was completed for an after-tax payment of $30million. Timing Electronic, Inc (ETI), adalah sebuah syarikat kecil ditubuhkan 15 tahun yang lalu oleh jurutera elektronik Tom Miller dan Jessica Kerr. ETI menghasilkan litar bersepadu untuk memanfaatkan teknologi desain campuran isyarat kompleks dan baru-baru ini memasuki pasar untuk generator timing frekuensi, atau peranti silikon masa, yang memberikan isyarat masa atau "jam" yang diperlukan untuk menyegerakan sistem elektronik. Ia awalnya adlh produk jam digunakan dalam aplikasi video PC grafik, tetapi pasaran kemudian diperluas untuk merangkumi motherboard, peranti PC periferal, dan pelanggan elektronik digital yang lain, seperti tempat televisyen digital dan game konsol. ETI juga mereka dan memasarkan litar bersepadu aplikasikhusus (ASICS) bagi pelanggan-pelanggan industri. Design ASIC menggabungkan teknologi analog dan digital, atau dicampur-isyarat,. Selain Tom dan Jessica, Nolan Pittman, yang menyediakan modal bagi syarikat, adalah pemilik primary ketiga. Masing-masing mempunyai 25 peratus daripada 1 juta saham yang beredar. Beberapa orang yang lain, termasuk pekerja, memiliki saham syarikat yang tersisa. Baru-baru ini, syarikat merancang sebuah motherboard komputer baru. desain syarikat adalah baik lebih cekap dan lebih murah untuk menghasilkan, dan desain ETI diharapkan untuk menjadi standard dalam banyak komputer peribadi. Setelah menyiasat kemungkinan manufaktur motherboard, ETI ditentukan bahawa kos yang terlibat dalam pembangunan kilang baru akan menjadi penghalang. Pemilik juga memutuskan ke luar bahawa mereka unwilling membawa pemilik lain di luar besar. Sebaliknya, ETI tlh m’jual desain untuk sebuah syarikat luar.

we get the following equation to calculate the price of a share of stock today: What are the implications of this result in terms of whether the company should pay a dividend or upgrade and expand its manufacturing capability? Explain.b.ROE x b Salah satu cara untuk nilai saham adalah pertumbuhan dividen. dividen tahun berikutnya akan menjadi pendapatan tahun depan. How would Jessica’s proposals affect the company? 3. E1. kita mendapatkan persamaan berikut untuk menghitung harga saham hari ini: Apa implikasi dari kputusa ini dalam hal apakah syarikat perlu membayar dividen atau upgrade dan memperluaskan keupayaan perkilangan? Jelaskan. Tom believes the company should use the extra cash to pay a special onetime dividend.Penjualan desain motherboard telah selesai bayaran selepas cukai sebanyak $ 30million. kali 1 tolak nisbah simpanan. E1. How would you evaluate this proposal? . times 1 minus the retention ratio. 6. How will this proposal affect the stock price? How will it affect the value of the company? 2. Jadi. Consider the following: The dividend payout ratio is 1 minus b. Another option discussed by Tom. model. Pertimbangkan yang berikut: Nisbah pembayaran dividen adalah 1 . Jessica believes that the company should use the extra cash to pay debt and upgrade and expand it existing manufacturing capability. So. Does the question of whether the company should pay a dividend depend on whether the company is organized as a corporation or an LLC? 1. 5. and return on equity. model. P0 = E1 (1-b) Rs . atau tumbuhlamanya. Persamaan yang paling umum digunakan untuk mengira laju pertumbuhan berterusan adalah tingkat pengembalian ekuiti kali nisbah retensi. Substituting these relationships into the dividend growth model. Mengganti hubungan ini ke dalam model pertumbuhan dividen. Are his arguments correct? How will a share repurchase affect the value of the company? 4. He argues will increase the company’s P/E ratio. The most commonly used equation to calculate the sustainable growth rate is the return on equity times the retention ratio. One way to value a share of stock is the dividend growth. return on assets. di mana b adalah "simpanan " atau "plowback" nisbah. or growing perpetuity. where b is the “retention” or “plowback” ratio. Nolan is in favor of a share repurchase. the dividend next year will be the earnings next year. Jessica and Nolan would be to begin a regular dividend payment to shareholders.

where b is the “retention” or “plowback” ratio. So. we get the following equation to calculate the price of a share of stock today: What are the implications of this result in terms of whether the company should pay a dividend or upgrade and expand its manufacturing capability? Explain. E1. Consider the following: The dividend payout ratio is 1 minus b. 6. times 1 minus the retention ratio. The most commonly used equation to calculate the sustainable growth rate is the return on equity times the retention ratio. or growing perpetuity.5. Substituting these relationships into the dividend growth model. One way to value a share of stock is the dividend growth. Does the question of whether the company should pay a dividend depend on whether the company is organized as a corporation or an LLC? . the dividend next year will be the earnings next year. model.

the business should still keep the proceeds because of tax law. . Take ALCOA (the Aluminum Company of America) as an example. True to form.89%.In the days of falling stock prices.600).000 reinvested at 8% = $5.000 would have gone to the IRS. do not necessarily make the company a better investment. When the $100. etc. Companies that earn high returns on equity.000 available to the investor to reinvest at 8%. For simplicity’s sake. leaving only $70. At the end of the year.000 was paid out as dividends. According to Yahoo! Finance. Taxes and Dividend Policy The tax consequences are tremendously important.600 ($70.) with low returns on equity would best serve shareholders by paying out profits as dividends. If company ABC is earning 25% on equity with no debt. it would have been subject to the investor’s individual tax rates. If the $100. Why? Say. for instance. the investors could only expect a return of $5. however. If the business reinvests that money back into itself.000 on the reinvested earnings. and large room to expand in their current industry would best serve their shareholders by paying no dividends. management should retain all of the earnings because the average investor probably won't find another company or investment that is yielding that kind of return. they should opt to reinvest all of the company’s available resources into growing the value of the underlying business. and the individual investor can only hope to earn around 8%. Over time. Board of Directors will often begin to pay dividends to help stabilize the company’s stock. Investors can almost certainly earn a higher return. the company pays out a lot of its cash flow to shareholders. In other words. a company should only pay dividends if it is unable to reinvest its cash at a higher rate than the shareholders (owners) of the business would be able to if the money was in their hands. have little or no debt. the company has a return on equity of 4. a small company consistently earning 8% on equity made a profit of $100. Many investors consider these dividends as a sign of safety and financial conservatism (which they are in many cases). even when adjusting for the adverse tax effects. the shareholders could reasonably expect the company to earn $8. Dividends in and of themselves.000 last year. Businesses that operate in mediocre industries (such as steel.000 had been paid out in the form of dividends. $30. the discrepancy can add up to very significant numbers. The shareholders will be rewarded through appreciation in the stock price. let’s say all of the shareholders are in the 30% tax bracket. Instead. If the company is earning 8%. railroads.

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