Question

JAS Company has just finished it's fiscal year. During the year they paid the following dividends:

First Quarter 0.50$ per share

Second Quarter 0.55$ per share

Third Quarter 0.60$ per share

Fourth Quarter 0.65$ per share

At the start of the year the stock price was $68.00

At the end of the year the stock was trading at $73.00

-What is the number one job of management in a company?

-How much (if any) Shareholder Wealth did JAS create last year? state in annual percentage

-Do you believe the Shareholders are happy with their returns?

Please show work please!

Answer 1

1)In company, wonership and management are different things. Ownership of company is with share holders and management is with directors of the company. Thus first and foremost job of management is to keep shareholders happy. This can be done by creating their wealth. i.e by performing well share price of company will increase and so as wealth. Another way to keep shareholder happy is to give regularly dividend. In this case share price has increased along with regular dividend. Hence management has done good job

2) Total return = Dividend+ capital appreciation/ Price of stock at begining

=0.5+0.55+0.6+0.65+(73-68) / 68

=7.3/68

=10.735%

3) 10.735% return is more than the bank provide on thier FDS, hence i believe shares holders are happy with their return.