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SWOT Analysis – Weakness

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBL Exams › SWOT Analysis – Weakness

  • This topic has 2 replies, 2 voices, and was last updated 7 years ago by chamakc.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • February 10, 2018 at 9:44 am #436198
    chamakc
    Participant
    • Topics: 9
    • Replies: 4
    • ☆

    Dear Mr Garrett

    I was reading the Daily Telegraph Business section dated (Friday)9th Feb 2018. They did a SWOT analysis on a company called (M&C)Millennium & Copthorne, a hotel business.

    One of the weaknesses mentioned was a 16% reduction in dividends paid to shareholders at 6.5 pence per share by M&C. The paper mentioned the reason for the reduced dividend payment was due to the requirement of significant capital investment.

    My question was why would a reduction in dividend payment be considered as a weakness for a company(M&C or any other company)?

    Kind Regards

    February 10, 2018 at 10:12 am #436200
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10597
    • ☆☆☆☆☆

    It is not completely logical, but reduction in dividends, even for reinvestment, is disliked by many investors. It is taken as a signal thqt future dividends might be low too.

    Low dividends make a share, as an investment, less attractive as a place to put your money. In theory the share price drops and any additional share issues will be more difficult and have to be made at a lower price.

    February 10, 2018 at 11:03 am #436206
    chamakc
    Participant
    • Topics: 9
    • Replies: 4
    • ☆

    Thank you Mr Garrett!

  • Author
    Posts
Viewing 3 posts - 1 through 3 (of 3 total)
  • The topic ‘SWOT Analysis – Weakness’ is closed to new replies.

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