Financial alliance boots - Essay Example

What do you think are some of the arguments that could be raised against this policy? The report will provide detailed calculations and will make sure that all assumptions are clearly stated and explained. To determine how effective are the value delivered to the shareholder we need to know whether the actual ratios generated are higher than the implied cost of capital. In other words there must be an evidence to tell that the wealth of the stockholders increased or maximized compared with those companies with are part of the FTSE 100 over the last three years.

Please note that shareholder value means increased wealth for purposes of this finance paper since it is assumed that investors invest to increase wealth. The FTSE 100 Index shows “the 100 most highly capitalized companies listed on the London Stock Exchange,” (Forbes.com (2007), which certain requirements by the FTSE Group, such which include London Stock Exchange full listing with a Sterling or Euro dominated price, complying with certain tests on nationality, free float, and requirements for liquidity.

The index is viewed as a barometer of success of the British economy (Guardian Unlimited, 2007) and it not actually a stock exchange. Being part therefore of the FTSE 100 is an indication of top performing companies in UK in terms of stock prices and the company must be doing well. Against therefore the standard which holds the company belonging to the index, how Alliance Boots does perform in delivering value to stockholders. Citing therefore the rates of Alliance Boots, we have the following information for the lasts three years below: Basing from the information above, in terms of delivered stockholder value, it could be deduced that the company is being well in terms of the high dividend yield at 4.2%, 4.8% and 4.

8% for the last years ending March 31 of 2006, 2005 and 2004 respectively. Dividend per share was almost