Corporate Finance Research Paper Example | Topics and Well Written Essays - 1250 words

Corporate Finance - Research Paper Example Total numbers of shares are taken as follows: = Year end $ value / $10 of face value Working: = Total Earnings/ No. of shares = 441,000 / 31,800 = 13.86 approximately $14 Earnings per share = $ 14 Considering a 50% payout ratio, the dividend would be $7 The reasonable estimate of the 50% of the shares therefore would be: = 31800 x 50% = 15900 Estimate = 15900 x 86.95 Total Best Estimate = $ 1,382,505 Q#2 Market Structure and trading conditions The total market of the Polishing and other allied products are over $4.5Billion. The market is largely fragmented with many small to medium players serving different niches of their target market. Essentially, the market is distributed into three distinct categories based on product classification. Carlton falls under the category of Chemical suppliers supplying chemicals to independent distributors who then sell to the end users. The fragmentation of the market is also due to low barriers to entry due to low cost of production involved. Since, the market is typically divided into two broader classes of chemical supplies and cleaning machinery therefore the overall cost of producing is low. This is also reflected from the fact that the gross margin of Carlton is 44% suggesting that the cost of producing the finished goods is relatively low. However, net margin within this industry is relatively low mainly due to high marketing costs involved. It has been the industry practice that distributors once acquired are hard to replaced therefore it require higher resources and persuasion to list a distributor serving the competitors. Most of the costs, therefore, are incurred in marketing overheads therefore the overall net margins are low in industry as most... The fragmentation of the market is also due to low barriers to entry due to low cost of production involved. Since, the market is typically divided into two broader classes of chemical supplies and cleaning machinery therefore the overall cost of producing is low. This is also reflected from the fact that the gross margin of Carlton is 44% suggesting that the cost of producing the finished goods is relatively low. However, net margin within this industry is relatively low mainly due to high marketing costs involved. It has been the industry practice that distributors once acquired are hard to replaced therefore it require higher resources and persuasion to list a distributor serving the competitors. Most of the costs, therefore, are incurred in marketing overheads therefore the overall net margins are low in industry as most of the key players have negative growth rates in terms of their net income. Overall the market is competitive with no clear market leadership however; different players serve their target markets with moderate success due to long established business and consumer relationships strengthened due to delivering high end services. Historically, Co has profitable with consistent growth rates achieved in both revenue as well as profitability.