Abbeycrest and Delta as a Leading Businesses and Recognized All over the World - Essay Example

Financial Analysis of ABBEYCREST PLC and DELTA APPAREL PLC Inc Financial Analysis of ABBEYCREST PLC and DELTA APPAREL PLC Inc Introduction Abbeycrest and Delta are leading businesses and recognized all over the world. They operate in almost every industry (John, 2008). Report shows that both Abbeycrest and Delta provide services that are highly specialized to all types of businesses especially those within their jurisdiction. According to William C. Gale, the senior researcher at the finance and chief financial officer of Delta, the Corporation went public in the year 1983. The corporation had opened close to twenty three thousand restaurants in one hundred and ten countries making it the largest company in the industry and the market leader with people giving it credit of having the best reputation. This amplified the revenues to 1.4 billion dollars every twelve months and 207, 772 dollars cash and equivalents of cash at the end of 3 month period. Abbeycrest became extremely busy in that it opens new outlets every three hours. It has twice the market share of other shops and their closest competitors. Through its over twenty three thousand shops internationally, Delta serves about 1% of the world’s population with uniform and uniform related facilities on any given day. The biggest attraction and the backbone of the corporation are uniforms. By constantly coming up with new-flagged items to add on the catalogue, both Abbeycrest and Delta maintain it is ready for action advantage. Towards the end of this paper, there will be answers for every question concerning Abbeycrest and Delta (John, 2008). The codes of ethics that govern Delta Corporation are exceptionally clear and mostly address dividends. They fully commit to them, and they have staff whose work is to check and make sure it followed to the letter and complied. Many issues that the shops heads audit against, periodically by both internal and external mechanism spell out because of this code of ethics. The code is a form of promise that promises to conform to standards of business behavior. Integrity and keeping off potential conflicts that maybe in private or public nature are among the things the code promises to maintain. This makes sure that Abbeycrest especially is transparent on its course action that they use to resolve any action. By so doing they work towards convincing relationship with the stakeholders who include their customers. Delta Corporation has the ethical conscientiousness of declaring the returns to the shareholders on the economic gains. These returns strictly observe, punctual, accuracy, transparent and required depth. The promises that the codes give are to uphold the regulations of businesses, to act with transparent facts, without malice, and with reasonable care that will suffer from any pressure coming from third parties. Business freedom demonstrated to the second party auditors that are independent is what the corporation cherishes. Unless dully authorized, the codes of ethics bring the employees tight together to maintain the corporation’s confidentiality, which is vital. Another promise is ensuring all employees have exceptional quality communication flow and regularly to update the stakeholders on any financial matter that comes up in the business. It adheres to everything it says and follows it to the letter. CHAPTER 1: INTRODUCTION A dividend is the form of service in the hands of the final user for example orange juice made from oranges while an immediate good is the commodity used as an input during the production of the final good for example, oranges used during the production of orange juice. In the definition of all economics of GDP, there were consultations and references to final goods and services. Since dividend is a portion in the total value in the market, there is justified need to specify them as dividends. A big difference lies between the intermediate goods and the final goods. Final product, which could either be a good or service, is what is already in the hands of the last consumer or user. In the stores, a consumer buys orange juice but not oranges therefore orange juice is the final good. (MacAfee, 2009) 1.0 OVERVIEW A good question now is what are the oranges that make the orange juice? The answer is oranges are intermediate goods. Following the definition that dividends are the units of production for final goods which in this case ere the oranges. Final goods may not be completely similar to the intermediate goods since there is processing involved. Only qualities of intermediate goods are present in the final goods. For example, the smell and color of oranges remain the same. Content could also be the same but the only difference is form. Final goods are the processed commodities for the purposes of meeting the needs and wants of the final user. (Rittenberg, 2009) When computing dividends, only the expenditures on final goods appear on the calculations. The reason why the dividends do not appear on the calculations is to avoid double counting. Double counting when a good or service gets into account for more than one time in the process of computing GDP. For the purposes of illustration, when oranges get into account and orange juice gets into account as well, there will be a double counting because oranges are also in the orange juice hence counted twice. 1.1 RATIONALE FOR THE RESEARCH In the recent past, economists do not have trust in dividends in terms of the nation’s well being. They have been proposing for alternative measures like the profits giving reasons why dividends are not good enough. Below are their outlined reasons. A dividend leaves out many goods by only counting money transactions. There are many disregarded important parts of the economy. For example, most household tasks like caring for the children and the elderly, cleaning and general home maintenance, preparation of food and voluntary services do not get into account. During the calculations, dividends zero rates all these activities assuming they do contribute anything to the economy. This alone contributes a lot to distorted policies of the public. Incases where family act gets criticism of dividends reduction, the denigrations are baseless because it does not reflect the increments in many economies of the household initiated by the act. (MacAfee, 2009) 1.2 BACKGROUND FOR THE RESEARCH A dividend takes care of all dealings as positive. Dividends treats crime, pollution, reduction of natural resources and divorce as gains therefore treating social structure breakdowns and normal surroundings as gains, for instance, dividends remain constant when a person buys a car, when the car gets into an accident, when the driver is taken to the hospital and when there is a follow up by the lawsuit. It does not distinguish between activities that diminish and those that contribute to the well-being. This scenario is like using a calculator with only the addition button but no subtraction button. Dividends increase in an unreasonable manner as long as cash changes hands. Dividends accounts for natural assets reduction as current income. This is an obvious contravention of principles guiding good accounting. If a hotel converts into parking lots and airport as a playing ground, dividends will treat all the money involved as up to date income and nowhere will it account it as depreciation of capital. Any company treated this way would never realize its stand and so is the country that relies on dividends to measure its well-being. The above statements clearly explain why a dividend is not a useful statistic. If it were a useful statistic, it would not take into account depletions as current income. (Rittenberg, 2009) There are two categories of spending made by the federal government, namely discretionary spending and transfer payments. All the spent money by the government has an effect on the economy. The government is big enough that it can spend when there is contraction of the economy therefore boosting the consumer confidence and the economy. Even without the realization of many who have been in the position of making monetary decisions, there have been the use of both discretionary and transfer payments. During the government spending for example funding a bridge, there are many choices involved but in transfer payment, there are no choices and it is almost mandatory. For example, when paying taxes and other important bills from the government, transfer payments remains the only choice. Transfer payments have been on the increase in the recent past because it is convenient and easy to transact. It is also direct and no problems like frauds are nowhere around the process. 1.3 RESEARCH AIMS AND OBJECTIVES Identify and explain the main general theoretical frameworks of dividend payout policy. To analyze and identify the dividend payout policy practices of Abbeycrest and Delta. To examine the relationship if any between dividend payout policy and share price over the last 5yrs of Abbeycrest and Delta (using e.g. simple linear regression analysis which will show the degree of relationship between dividend payout and share price). To make recommendations to the management of the companies based in findings of this research and draw a logical conclusion. In the history of the United States of America, there have been two major economic regressions. The first one occurred in the early 80s while the second regression occurred in the early 2000s and continues up to date. During the first regression, which was in the 1980s, Ronald Reagan was the president of the United States and he felt the loss. He had a big task to pull out the country out of the downturn and make it prosper. When the second one began, Reagan had already left the presidential seat giving way to George bush and up to date, regression continues. Just like Reagan and President Bush, the current president still promises to make the economy rise again but up to today, nothing has happened. (Glasner, 1997) Huge taxes were the cause of the regression since many people could only afford to buy commodities but could not afford to pay the huge taxes. Reagan ordered for a reduction in taxes and many people traded more raising the economy to where it was before but many people were against especially the democrats. The rise in economy looked like a boom to the economy and by the time Reagan leaving office, other recessions had already cropped out. Lowering or reducing taxes could have led to the boom making it the only boom to occur by that time. Basing facts on the history of the United States and regressions, the country will continue to experience regressions even in the next five years. (Knoop, 2004) There are a number of studies that have found that a firm’s level of financial leverage has a negative effect on dividend policy. The studies show that highly levered companies look to maintain their internal cash flow in order to fulfill duties, as opposed to distributing the available cash to the shareholders, which protects their creditors. Firms that have high leverage ratios normally have high transaction costs, and are thus in weak positions to pay bigger dividends to evade the costs of external financing. In order to analyze the degree to which debt is able to affect dividend payouts, this analysis made use of the financial leverage ratio, or else ratio of liabilities which comprises total short-time and long-time debt to the total shareholders’ equity. John (2009) also found a considerably negative connection between the two items. The fifth hypothesis shows that Dividend Payout is negatively linked with financial leverage. 4.2.7 Profitability A firm’s profitability is an important variable of dividend policy. Profitability is the ratio of the net profits to the money that shareholders put into a company. This often creates an assumption that the dividend ratio per year bases on the firm’s earnings in that year. The dividend payout policy of Abbeycrest and Delta is influenced by level of profitability, the cash flow position, and the growth development and the opportunities for investing in the firms. Profits are always regarded as the key indicator of a firm’s capability to pay dividends. Abbeycrest and Delta current and past years’ levels of profit are significant factors in influencing the amounts of dividend payments. Overview of the Companies Delta Apparel, Inc. Delta Apparel, Inc. specializes in the design, merchandising, sales, and marketing of a variety of lifestyle branded active wear, apparel, and headwear for men, women, juniors, youth and children at a wide range of price points. Delta became an independent public company in July of 2000. At that time, our business was solely based on the sale of unembellished basic tees. Since then, we have become a diversified branded apparel company through the completion of seven acquisitions, which added well-recognized brands and licensed properties to our portfolio, expanded our product offerings and broadened our distribution channels and customer base. Our products are sold in all distribution tiers and store types, including specialty stores, boutiques, department stores, mid-tier, and mass chains. From a niche distribution standpoint, we also have strong distribution at college bookstores, to the U.S. military and with independent screen printers. Through Art Gun, we also provide shoppers a “virtual art studio” to create customized graphics on apparel products ABBEYCREST PLC Abbeycrest plc is a United Kingdom-based company. The Company is engaged design, manufacture and distribution of precious metal jewellery, principally in gold, platinum, palladium and silver. It operates in two segments: brands division and essentials division. Its Brands division, which supplies the higher-end jewellery sector with jewellery collections. The Essentials division, which serves volume markets with mainstream precious metal jewellery products. The company operates in the United Kingdom, the Europe and other regions. Its subsidiaries include Abbeycrest International Limited, Eric’s Jewellers Limited, Brown & Newirth Limited, Abbeycrest (Thailand) Limited, Abbeycrest North America Inc. and Abbeycrest Hong Kong Limited. Bibliography Hoque, F., Walsh, M., Mirakaj, L., Bruckner, J. 2011. The Power of Convergence: Linking Business Strategies and Technology Decisions to Create Sustainable Success. New York: American Management Association Chopra, S. & Meindil, P. 2007. Supply chain management: strategy, planning, and operation. Pearson Prentice Hall. University of Michigan: Michigan Copacino, C. 1997. Supply chain management: the basics and beyond. St. Lucie Press. 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