Saturday, August 24, 2019

Corporate Finance Essay Example | Topics and Well Written Essays - 1750 words - 1

Corporate Finance - Essay Example TSR is defined as a measure that helps in evaluating the performance of different company’s shares and stocks over the passage of time. It takes into account appreciation of share price and payment of dividends in order to show the total shareholder’s return and is expressed as percentage. It is calculated after considering capital gain, which is accrued after purchase of company’s share. In calculating TSR, it is assumed that the dividends are reinvested in the company shares (Rexam Plc, 2014b). Through calculation of TSR, the performance of share is compared over the period of time. This is the main advantage of calculating TSR as it shows the exact position of the share even if it has high growth and low dividend or low growth and high dividend. After collecting relevant information from the annual reports of the two companies mentioned above, TSR is calculated. The information needed for the same are share price at the end and beginning of the year along with the dividend that are paid out to the shareholders. This information has helped to calculate the TSR of the companies, which are provided in the following table (Rexam Plc, 2014a): The above table reflects the change or fluctuation in the value of TSR over the 7 years. It is observed that the TSR value of Rexam Plc has increased over the years from a negative value since 2007. During the period 2007-2009, the company was unable to maintain a positive TSR mainly due to its poor performance in the industry, which occurred mainly due to the insufficient sales. However, positive TSR after 2009 indicates that the company has improved its share price performance, which is the result of increase in sales. Presently, the company has satisfied customers by offering them with good return and higher dividends, which are reinvested in company shares that are issued for them. From the above table it is evident that GSK has encountered

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