You are to assume the role of the controller of a publicly traded company called, Textron, Inc. The vice president of finance will be presenting information to the board of directors and needs your input.
Textron, Inc., went public five years ago. The company performs research and development in artificial intelligence. The company has operations in Chile, Japan and Germany. The company has been highly profitable, and this has increased the company’s stock price from the initial public offering of $100 per share to $1,300 per share.
The board of directors is considering declaring dividends to the stockholders for the first time. The vice president of finance will be making a presentation to the board of directors discussing the options. The vice president of finance has asked for your help with the presentation.
You are to:
- Discuss types of dividends
- Explain how dividends affect stockholders’ equity
- Explain why the board should declare dividends
- Discuss any financial risks associated with declaring dividends
