Comment, question or quotation of the day
31-03-2020 : Quote of the day
“We should let the markets take care of all that is important, and leave what is essential to the State.”
30-03-2020 : Should companies applying for state financial support be prohibited from paying dividends?
It should be remembered that dividends in well-managed companies correspond to liquid assets that the company does not need to use in its business once it has reached a financial structure that corresponds to its objective.
If, as a result of the health crisis we are experiencing, a company has liquidity needs, we have to be consistent and eliminate or sharply reduce the dividends paid, which are in no way an eternal commitment set in stone, but a discretionary cash outflow.
Then, and only then, can the company turn to the public authorities for help. By ceasing to pay dividends, it will thus strengthen its solvency (or avoid weakening it) before increasing its liquidity and indebtedness thanks to the Public Authorities (see our note of Friday 20 March).
It therefore seems to us financially (and politically) appropriate for the Public Authorities to make their financial assistance conditional on the cessation of dividend payments and share buybacks.
Good day and see you tomorrow.
The Vernimmen.com glossary provides definitions for a couple of thousands of financial, stock market or economic terms.
This financial dictionary allows beginners to progress in their learning of finance and to experts to cease the precise meaning of a sentence.
The Vernimmen.com Quiz offers over 300 questions with answers to progress in your understanding of finance and to test your knowledge.
Questions are sorted by key topics (financial analysis, investment and stock markets, value, financial engineering and financial management).
We frequently ask our readers to give us their point of view on a specific topic.
You will find here the current survey with the to-date status of answers as well as past polls.
Thanks to our partner Infinancial, we can offer on this page financial data on over 16 000 groups around the world.
Updated several times a year, this database offers information sometimes hard to find elsewhere (beta, …)
The Vernimmen.com Letter
Number 128 of March 2020
News : Liquidity and solvency in this new world
Statistics : Easier said than done: the vote of institutional investors in favour of environmental issues during AGMs
Research : Dramatic drop in the number of listed companies
Q&A : If the dividend doesn't remunerate shareholders, what does?
COMMENTS : Comments posted on Facebook