Glo-Bus 2017 - AC Camera and UAV Drone - Business Strategy - Quiz 2 Answers - P1

Glo-Bus 2017 - AC Camera and UAV Drone - Business Strategy - Quiz 2 Answers - P1 WWW.YOUTUBE.COM/ECOMFTU2012 / 08 MARCH 2017 1. Which of the following is NOT an action company co-managers can take to help meet or beat the investor-expected increases in the company's stock price in upcoming years? - Making it company practice to issue additional shares of stock each year and use the proceeds to pay down the debt outstanding until the company's debt-equity percentages reach 20% or lower for debt and 80% or more for equity - Increasing annual dividend payments to shareholders most every year - Making it a frequent management practice to allocate a portion of internal cash flows from operations to repurchasing shares of the company's common stock - Putting increased attention on boosting operating profits in all four geographic regions -- the resulting growth in operating profits companywide will act to increase total net profits and EPS; higher earnings per share are an important driver of the company's stock price - When the company's stock price drops because of unexpectedly weak company performance in the prior year but is expected to recover and rise in the next several decision rounds. opting to borrow money preferably in the form of 1-year loans from the Global Community Bank (but not so much as to impair the company's credit rating) and using the borrowed funds to repurchase outstanding shares of common stock 2. Which of the following is NOT an action company co-managers can take that has good potential for increasing the company's average ROE and helping the company meet or beat the investorexpected ROE targets in upcoming years? - Pursuing efforts to boost total operating profits in all four geographic regions -- the resulting growth in operating profits companywide will increase total net profits (a company's net profits are the numerator in calculating the company's ROE) - Paying a small annual dividend to shareholders (less than $0.50 per share) which is increased annually by about $0.05 per shares; a small but growing dividend provides the company with more cash to fund capital expenditures and/or pay down bank borrowings ahead of schedule - Using a portion of the company's internal cash flows from operations for the next several years to repurchase shares of common stock - Borrowing money from the Global Community Bank (preferably in the form of a 1-year loan that can be fully or mostly repaid the following year) and using the proceeds to repurchase outstanding shares of common stock: such action makes considerable financial sense when the company's stock price is expected to rise substantially in future years and/or when unexpectedly weak company performance in the prior year causes a drop in its stock price - Increasing annual dividend payments to shareholders (because all net profits not paid out as dividends are treated as retained earnings and because bigger retained earnings have the effect of increasing shareholders equity)