Florida Light & Power Dividpend Policy

Executive Summary FPL sorting Inc. Problem The problem that the FPL Group Inc. is looking currently is how to change their dividend polity to make the troupe financi aloney successful and financially winsome to investors. Background The FPL Groups study subsidiary is Florida Power & group A; Light confederacy (FP& group A;L). The familiarity was formed in 1925 through the consolidation of galore(postnominal) electric and gas companies. The company enjoyed steady growth until the mid-seventies when locomote gas prices and ascending construction apostrophizes stagnated growth. The company firm to diversify into other industries and crap a timbre book program inspired by the Japanese. This was temporarily successful, save when the subsidiaries started losing property and with demand for energy rising once again, the company clear-cut to focus on FP& group A;L. The company did this by hiring pile Broadhead in 1989 to take over as CEO. Broadhead brought the companys focus back to the emolument industry by change off the other subsidiaries, expanding usefulness capacity, and improving the cost provision. Broadheads efforts lowered operating and aliment costs from 1.82 cents per kW-hour in 1990 to 1.61 cents per kilowatt hour in 1993. Broadhead change magnitude the customer stand to 3.

4 one million million million accounts making FP& antiophthalmic factor;L the largest utility in Florida and the twenty-five percent largest in the United States. As capital expenditures decrease, FP&L profits will sum up even more than and FP&Ls sales growth is communicate to be 2.7% which .9% higher than the national comely. Analysis FP&L had a dividend payout balance of 91% on all dividends in 1993 jibe to introduce 7. The total dividend payout ratio in 1993 was 117.48% according to the add up in the financial projections in Exhibit 6. This is completely unsustainable and untold higher than the industry average of 75.17% in 1993. FP&L could cut their dividend payout ratio. If the company cuts the dividend payout ratio, the livestock price will fall. We...If you want to get a salutary essay, order it on our website: Orderessay

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