Florida Light & Power Dividpend Policy

Executive Summary FPL grouping Inc. Problem The problem that the FPL separate Inc. is face currently is how to change their dividend policy to make the caller pecuniaryly successful and financially attractive to investors. Background The FPL Groups major subsidiary is Florida Power & group A; Light Company (FP& amp;L). The familiarity was formed in 1925 done the consolidation of many electric and gas companies. The companionship enjoyed watertight growth until the mid-seventies when rising gas prices and rising locution apostrophizes stagnated growth. The confede ration decided to diversify into other industries and create a timbre control program inspired by the Japanese. This was temporarily successful, save when the subsidiaries started losing money and with demand for energy rising erstwhile again, the companion decided to focus on FP&L. The company did this by hiring James Broadhead in 1989 to take over as CEO. Broadhead brought the com panys focus back to the utility intentness by selling off the other subsidiaries, expanding utility capacity, and up the cost provision. Broadheads efforts lowered operating and maintenance cost from 1.82 cents per kilowatt-hour in 1990 to 1.61 cents per kilowatt hour in 1993. Broadhead improverd the guest stand to 3.

4 million accounts making FP&L the largest utility in Florida and the fourth largest in the United States. As capital expenditures decrease, FP&L profits will increase even more than and FP&Ls gross revenue growth is communicate to be 2.7% which .9% higher than the national average . summary FP&L had a dividend payou! t ratio of 91% on all dividends in 1993 jibe to exhibit 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 manufacture average of 75.17% in 1993. FP&L could cut their dividend payout ratio. If the company cuts the dividend payout ratio, the stock price will fall. We...If you pauperization to get a full essay, order it on our website: BestEssayCheap.com

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