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Subject: Does firm need cash on hand to pay out public expectations? rss

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Rafał Kruczek
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Cole Wehrle wrote:
When a company pays out dividends they are required to pay shareholders dividends according to their stake in the company.

The game uses very specific rounding rules (only .75 or higher is rounded up to the nearest integer). For that reason the Dividend table is used.

So, imagine you are a 10% shareholder. In order to get a dividend of 1, the firm would need to payout at least 8. For a dividend of 2, you'd need 18.


Here's another example, from the perspective of a firm's owner. Imagine you have a firm with 20 in the treasury. You have one share holder who owns 30% of the company. You defacto own 70% of your own firm then.

You are deciding how much to pay out in dividends. There are 3 open regions, so you need to pay out 7 in order to stay in buisness.

Okay, let's look at the chart. Take a look at the 30% row. Excluding numbers above 20 (since the firm can't pay out more than 20), the values are: 6 (2), 10 (3), 13 (4), 16 (5) and 20 (6). The numbers in parenthesis are the dividends associated with that payout.

So, if you pay at least 6, you'll need to give your 30% shareholder 2. Again, the number of open regions is 3 so the minimum payout is 7. Assuming you pay out that minimum, you'll owe your 30% shareholder 2 and you'll take the remaining 5. Now, let's say you choose to pay out 9. Because it doesn't cross the next dividend threshold, you'll still only pay 2 to your shareholder, but now you'll get 7.

Make sense?




Let's assume in this example that firm has only 6 in the treasury.
Owner (besides last turn) can add money to his firm, so if 1 pound is available he can temporarily invest it and get it back so effectively minor shareholder got 2 and owner got 4.
But what happens if he hadn't got 7 pounds total firm and family money i.e. if company has money to pay out all minor shareholders their cut from public expectations, can major shareholder skip this moving money back and forth if he haven't got it on hand?
Can minor shareholders agree to be paid in barter ( for example shares)?
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Cole Wehrle
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rafal100 wrote:
Cole Wehrle wrote:
When a company pays out dividends they are required to pay shareholders dividends according to their stake in the company.

The game uses very specific rounding rules (only .75 or higher is rounded up to the nearest integer). For that reason the Dividend table is used.

So, imagine you are a 10% shareholder. In order to get a dividend of 1, the firm would need to payout at least 8. For a dividend of 2, you'd need 18.


Here's another example, from the perspective of a firm's owner. Imagine you have a firm with 20 in the treasury. You have one share holder who owns 30% of the company. You defacto own 70% of your own firm then.

You are deciding how much to pay out in dividends. There are 3 open regions, so you need to pay out 7 in order to stay in buisness.

Okay, let's look at the chart. Take a look at the 30% row. Excluding numbers above 20 (since the firm can't pay out more than 20), the values are: 6 (2), 10 (3), 13 (4), 16 (5) and 20 (6). The numbers in parenthesis are the dividends associated with that payout.

So, if you pay at least 6, you'll need to give your 30% shareholder 2. Again, the number of open regions is 3 so the minimum payout is 7. Assuming you pay out that minimum, you'll owe your 30% shareholder 2 and you'll take the remaining 5. Now, let's say you choose to pay out 9. Because it doesn't cross the next dividend threshold, you'll still only pay 2 to your shareholder, but now you'll get 7.

Make sense?




Let's assume in this example that firm has only 6 in the treasury.
Owner (besides last turn) can add money to his firm, so if 1 pound is available he can temporarily invest it and get it back so effectively minor shareholder got 2 and owner got 4.
But what happens if he hadn't got 7 pounds total firm and family money i.e. if company has money to pay out all minor shareholders their cut from public expectations, can major shareholder skip this moving money back and forth if he haven't got it on hand?
Can minor shareholders agree to be paid in barter ( for example shares)?


Sure. It's somewhat common for a firm in trouble to have an emergency shareholders meeting to raise extra capital.
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Rich James
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Cole Wehrle wrote:
rafal100 wrote:
Cole Wehrle wrote:
When a company pays out dividends they are required to pay shareholders dividends according to their stake in the company.

The game uses very specific rounding rules (only .75 or higher is rounded up to the nearest integer). For that reason the Dividend table is used.

So, imagine you are a 10% shareholder. In order to get a dividend of 1, the firm would need to payout at least 8. For a dividend of 2, you'd need 18.


Here's another example, from the perspective of a firm's owner. Imagine you have a firm with 20 in the treasury. You have one share holder who owns 30% of the company. You defacto own 70% of your own firm then.

You are deciding how much to pay out in dividends. There are 3 open regions, so you need to pay out 7 in order to stay in buisness.

Okay, let's look at the chart. Take a look at the 30% row. Excluding numbers above 20 (since the firm can't pay out more than 20), the values are: 6 (2), 10 (3), 13 (4), 16 (5) and 20 (6). The numbers in parenthesis are the dividends associated with that payout.

So, if you pay at least 6, you'll need to give your 30% shareholder 2. Again, the number of open regions is 3 so the minimum payout is 7. Assuming you pay out that minimum, you'll owe your 30% shareholder 2 and you'll take the remaining 5. Now, let's say you choose to pay out 9. Because it doesn't cross the next dividend threshold, you'll still only pay 2 to your shareholder, but now you'll get 7.

Make sense?




Let's assume in this example that firm has only 6 in the treasury.
Owner (besides last turn) can add money to his firm, so if 1 pound is available he can temporarily invest it and get it back so effectively minor shareholder got 2 and owner got 4.
But what happens if he hadn't got 7 pounds total firm and family money i.e. if company has money to pay out all minor shareholders their cut from public expectations, can major shareholder skip this moving money back and forth if he haven't got it on hand?
Can minor shareholders agree to be paid in barter ( for example shares)?


Sure. It's somewhat common for a firm in trouble to have an emergency shareholders meeting to raise extra capital.

I'm confused by this answer, at least to some of the questions. Assuming you 100% own your firm, the minimum payout is 7 pounds, but the firm has only 6 pounds and the family has 0 in their treasury. Does the firm fail?

Similarly, assume the above but there is also a 10% shareholder (and his family doesn't have any money either). Can the firm pay the 10% shareholder and short the "owner"? In other words, does the firm fail if it cannot pay the entire minimum 7 pounds?

And the last question was: assume the 10% shareholder scenario above, can that shareholder be paid in something other than pounds to meet the dividend requirement (e.g. ships, goods, promise cube(s), etc)? Or is it the case that the best you could do is make a deal where the other family buys shares in the firm, which infuses money that can then be used to pay the dividend obligation?
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Cole Wehrle
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arjisme wrote:

I'm confused by this answer, at least to some of the questions. Assuming you 100% own your firm, the minimum payout is 7 pounds, but the firm has only 6 pounds and the family has 0 in their treasury. Does the firm fail?

Similarly, assume the above but there is also a 10% shareholder (and his family doesn't have any money either). Can the firm pay the 10% shareholder and short the "owner"? In other words, does the firm fail if it cannot pay the entire minimum 7 pounds?

And the last question was: assume the 10% shareholder scenario above, can that shareholder be paid in something other than pounds to meet the dividend requirement (e.g. ships, goods, promise cube(s), etc)? Or is it the case that the best you could do is make a deal where the other family buys shares in the firm, which infuses money that can then be used to pay the dividend obligation?


Ack, sorry for muddying the waters--that's what I get for dashing off an answer. Let me see if I can clear things up.

So, the firm absolutely has to pay out enough money to meet public expectations. There are no exceptions to this. (Historical note: Public expectations is my way of talking about the movement of all of the other non-player actors (like banks) that offered the lines of credit that made the firms operation possible).

However, because negotiations can happen at any time during the game, in the moment before a firm fails, players can negotiate a solution. In fact, this is the main way that more shareholders are brought on board. It's also somewhat common for smaller firms to merge in order to survive. This is espeically common in games where the company remains somewhat strong and is able to open regions quickly in hopes of drowning the smaller firms.
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Rich James
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Thanks, Cole. That clears up much of the confusion.

Regarding your statement that players can negotiate a solution (and is the main way more shareholders are brought on board), I read that as agreeing with my statement that (in order to save that firm), you would need to make a deal where another family buys shares in the firm, which infuses money that can then be used to meet the dividend obligations to all owners.

And though it wasn't originally asked, I have one more question related to this: If a firm cannot meet public expectations, the rules say it fails and must pay out its entire treasury. How is that treasury divided in that case? Is there an obligation to pay what dividends you can to minority shareholders first?
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Cole Wehrle
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arjisme wrote:
How is that treasury divided in that case? Is there an obligation to pay what dividends you can to minority shareholders first?


It follows the standard dividend procedure so shareholders are paid out first with the remainder going to the owner.
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Rafał Kruczek
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Cole Wehrle wrote:
arjisme wrote:

I'm confused by this answer, at least to some of the questions. Assuming you 100% own your firm, the minimum payout is 7 pounds, but the firm has only 6 pounds and the family has 0 in their treasury. Does the firm fail?

Similarly, assume the above but there is also a 10% shareholder (and his family doesn't have any money either). Can the firm pay the 10% shareholder and short the "owner"? In other words, does the firm fail if it cannot pay the entire minimum 7 pounds?

And the last question was: assume the 10% shareholder scenario above, can that shareholder be paid in something other than pounds to meet the dividend requirement (e.g. ships, goods, promise cube(s), etc)? Or is it the case that the best you could do is make a deal where the other family buys shares in the firm, which infuses money that can then be used to pay the dividend obligation?


Ack, sorry for muddying the waters--that's what I get for dashing off an answer. Let me see if I can clear things up.

So, the firm absolutely has to pay out enough money to meet public expectations. There are no exceptions to this. (Historical note: Public expectations is my way of talking about the movement of all of the other non-player actors (like banks) that offered the lines of credit that made the firms operation possible).

However, because negotiations can happen at any time during the game, in the moment before a firm fails, players can negotiate a solution. In fact, this is the main way that more shareholders are brought on board. It's also somewhat common for smaller firms to merge in order to survive. This is espeically common in games where the company remains somewhat strong and is able to open regions quickly in hopes of drowning the smaller firms.

If I understood correctly rule of thumb is: "There MUST be enough CASH in firm's tresury (even temporarily) to meet public expectation or else firm fails"?
Shareholders can help pass this "fluidity test" by lending money to firm ( through major shareholder) and immediately getting them back?
And of course there is a possibility of getting a deal.
So if there are 2 companies "on the precipice" and owners have mutually have shares who decides which once is bancrupted giving the other player dividend money to save the other company(and for example merge is blocked by third party)?
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