Dividends, Splits, Buybacks, etc.

Question 1

Dividend Chronology

Answer 1

Declaration -> ex-dividend -> holder of record -> payment

If purchase on or after the ex-dividend date the holder will not receive the dividend

Ex-dividend = Holder of record - 2

Question 2

Debt Financed Share Repos

Answer 2

If E/P = after tax cost of debt -> no change to EPS

If E/P > after tax cost of debt -> EPS increases

If E/P < after tax cost of debt -> EPS decreases

Question 3

Share repos and BVS

Answer 3

If repurchase price < BVS then BVS increases

If repurchase > BVS then BVS decreases

Question 4

Cash conversion dynamics

Answer 4

If the OCC or CCC are high relative to peers then a company has too much cash tied up in working capital

Question 5

Calc EPS after buyback

Answer 5

= (total earnings - after tax cost of funds)/shares outstanding after buyback

where total earnings = old EPS * old shares outstanding