Assignment 2:Dividend Policy, Cott Corp. and the Beverage Industry

DUE: Thursday Nov 26, 2015 noon (for both the hardcopy and Turnitin copy).

Group Instructions: No groups of one and no groups of more than four. You are under no obligation to work in the same groups as assignment #1. It is each student’s responsibility to clarify and confirm who is in your group and avoid any misunderstandings.

This assignment should be written as a comprehensive report, no longer than eight pages, double-spaced (Markers will stop reading at the end of page 8), Arial 11-font (This paragraph is inArial 11 font), with 1” margins. Appendices and the executive summary (approximately 5% of the mark) are additional pages. Answer the questions clearly in the main body of the paper in a manner that develops “the story” that will eventually support the dividend policy recommendation. Use appendices for detailed calculations, assumptions and explanatory points to back up your main arguments. Well written andto the point answers will be rewarded.

USE THE TITLE PAGE PROVIDED AT THE END OF THESE INSTRUCTIONS. ALL CORRECT STUDENT NUMBERS AND CORRECT SECTIONS ARE REQUIRED IN ORDER FOR THE ASSINGMENT TO BE MARKED.

Part 1: Context (approximately 3-4 pages)

For this industry you should discuss at least the following items and any other issues you feel are important.

Using the recommended library sources:

1. Briefly describe the industry in which this firm operates.   What are the characteristics of businesses in this industry? Use tools from previous courses (i.e. such at Porter Analysis, and Value Chain Analysis, which are just two possible tools to be considered.)

2. Describe the main business activities of the firm. What is the operating strategy? The assets that the firm has, both on and off the balance sheet, will provide some insights into their business strategy. What assets, both on and off the balance sheet, does the firm use to conduct its business?   (This is not just a list of items from the annual report. Think about how the firm fits in the industry; be selective, prioritize and be analytical.) How is the firm’s operating strategy different/similar to Dr. Pepper Snapple’s strategy?

3. Describe and support what you find to be the important business/operating risks faced by the industry? By Cott? What are your conclusions regarding the firm’s operating risk relative to the industry?

4. Who owns the shares of Cott? Are there any major shareholders?   What implications, if any, do you see arising from its ownership structure? Include print outs that back up ownership discussion in the appendix.

Part 2: Dividend Policy Research and Analysis (approximately 3-4 pages)

Summarize the two firms’ historyof returning cash to shareholders. Include paying dividends (dividend payouts, dividend yields, dividend per share etc) and stock repurchases and /or stock splits. Summarize cash and cash equivalent levels on the Balance Sheet and capital expenditures, and Cash Flows from Operations for the past five years. You may also want to consider the relationship of dividends to cash, and dividends to cash flows as well as year over year changes. Present, describe and analyze this information both on an absolute and relative basis. Feel free to include any other data that you think is relevant for the dividend policy decision. You will find the use of clear tables in your appendices useful.

What kind of dividend policy does each of these firms have; residual or constant payout policy (or something in between)? Iseither of these firms atypical with regards to their dividend policy?

Applyall factors discussed in class which might influence dividend policy for this industry and these firms. Which factors are most influential on dividend policy for these firms?Do the firms’ dividend policies make sense giventhe industry and the firm’sbusiness strategies and history? (i.e. apply real life factors.)

Part 3: Conclusions and Recommendations (approximately1-2 pages)

Recommend a dividend policy forCott Corp.starting January 1, 2016. Be sure to support your recommendations with findings from your analysis above.By answering the questions above, you are building a case for appropriateness of yourrecommended dividend policy.

Presentation, writing style, logic, flow, format etc. is worth the remaining 15%.

NOTE: There is no one “right” answer to this question. Your analysis, support and explanations are what matter.

You will find useful information, for which you are responsible   Make sure you cite your sources AND supply a reference list. Use end notes, footnotes, and Works Cited.   If you quoted facts, numbers, opinions, you will either have to footnote at the bottom of the page OR provide “End Notes” at the end of your text before the appendices. Sometimes “End Notes” are also called “References”. Anything that is an end note/footnote must also be part of the “Works Cited”/References.

To help you with your references and to avoid plagiarism, I require that all projects be processed via turnitin.com before the due date. The class password is Election2015 and class ID is 10721531. I will not mark the assignment unless you have used turnitin.com to assess your referencing.

One hardcopy of the assignment is to be submitted by each group to room N204M by the due date and time stated above.

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