- CFA Exams
- 2025 Level II
- Topic 4. Corporate Issuers
- Learning Module 16. Analysis of Dividends and Share Repurchases
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Learning Outcome Statements PDF Download
| 1. Dividends: Forms and Effects on Shareholder Wealth and Financial Ratios compare theories of dividend policy and explain implications of each for share value given a description of a corporate dividend action; | |
| 2. Dividend Policy and Company Value: Theory describe types of information (signals) that dividend initiations, increases, decreases, and omissions may convey;
explain how agency costs may affect a company's payout policy; | |
| 3. Dividend Policy: Other Theoretical Issues explain factors that affect dividend policy in practice; calculate and interpret the effective tax rate on a given currency unit of corporate earnings under double taxation, dividend imputation, and split-rate tax systems; | |
| 4. Factors Affecting Dividend Policy compare stable dividend with constant dividend payout ratio, and calculate the dividend under each policy; describe broad trends in corporate payout policies; | |
| 5. Payout policies compare share repurchase methods; calculate and compare the effect of a share repurchase on earnings per share when 1) the repurchase is financed with the company's surplus cash and 2) the company uses debt to finance the repurchase; calculate the effect of a share repurchase on book value per share; | |
| 6. Share Repurchases, Methods and Financial Statement Effects explain the choice between paying cash dividends and repurchasing shares; | |
| 7. The Dividend versus Share Repurchase Decision calculate and interpret dividend coverage ratios based on 1) net income and 2) free cash flow; identify characteristics of companies that may not be able to sustain their cash dividend. | |
| 8. Analysis of Dividend Safety describe global variations in ownership structures and the possible effects of these variations on corporate governance policies and practices; |
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