Discuss the Proactive Approach and the Reactive Approach to TNA

question 55

Essay

Discuss the proactive approach and the reactive approach to TNA.

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Definitions:

Forecasted Net Income

Forecasted net income is an estimate of a company's future profits after all expenses and taxes have been subtracted from revenues.

Total Dividends

The sum of all dividend payments made by a company to its shareholders over a specified period, usually a fiscal year.

Residual Dividend Policy

A policy wherein dividends are based on the earnings left over after all operating expenses and expansion projects are funded.

Target Capital Structure

The optimal mix of debt, equity, and other securities that a firm aims to hold, which minimizes its cost of capital and maximizes its stock price.