With Reference to the Data in Appendix B, Figure 3, Do You Think the Shareholders of Scott Electronics Plc Will Be Pleased with the Company’s Financial Performance in 2011?

733 Words Nov 11th, 2015 3 Pages
The Head of New Product Development, David Perryman, has been set the objective of devising a project to increase the profitability of Scott Electronics PLS and to provide a greater dividend to shareholders. One reason to why shareholders may be pleased with the company’s financial performance in 2011 is due to the fact that the total dividends have increased from £1m in 2010 to £2m in 2011, which is shown in figure 3. The dividend per share measure the overall profit generated for each share in existence over a particular period. It simply looks at the dividend obtained from each share a shareholder owns. This is expressed in terms of the number of pence per share. This amount will normally be paid in two instalments. Using Appendix B I …show more content…
Shareholders will be happy with this as they will know that Scott Electronics will have enough assets to pay its debts, and is not in danger of bankruptcy. Also it will reassure them that the firm is not holding too much cash which is an inefficient use of resources.

However, when looking at figure 3, it informs us that in 2011 the industry average dividend yield is 25%, whereas Scott Electronic dividend yield in 2011 is 5% lower than that industry average. The outcome of this might be that shareholder think that it is unfair and in turn it could potentially result in them selling their shares. In contrast to my previous point, this will make the shares at Scott Electronic less attractive and deter impending shareholders. Another reason that Scott Electronics Plc wouldn’t be pleased with the company’s financial performance is due to the profitability of the company. In 2011 the company raised £2 million from the sale and leaseback of its head office. Therefore, in years to come their fixed costs will most likely increase due to them having to pay rent. Also, the one-of item may have been the only reason to why the finical performance improved, and not actually because Scott Electronic Plc was profitable.

To summarize I think that in generally the shareholders will be will be pleased with the company’s financial performance in 2011 especially due to the

Related Documents