Goodwill - Dividends

08.07.2019

Factor “Dividends” is 1 out of 8 factors that GMC simulator uses to calculate the company's Goodwill value. Below are presented parameters from decision and management report that are most correlated with Goodwill factor “Dividends” when calculating the company's Goodwill value. Parameters include direct and inverse correlation:

  1. Dividends: 0.75
  2. Cash flow (Net cash flow): -0.52

 

The most accurate indicator of the Goodwill factor “Dividends” is total amount of Dividends paid for all game periods, i.e. this factor has a cumulative effect and does not depend on competitors in the group.

 

Dividends

Diagram below shows the dependence of the Goodwill factor “Dividend” on paid Dividends for scenarios 12C1, 12C3, 14C1 and 14C3 in 1 period.

 

It can be seen that Goodwill values form several trends that are some distance behind, but run parallel to each other in the diagram. This happens due to differences in the absolute value of a company's Cash flow.

 

Cash flow

Diagram below shows the dependence of the Goodwill factor “Dividend” on the Cash flow value for scenarios 12C1, 12C3, 14C1 and 14C3 in 1 period. Paid 1% Dividend.

 

Absolute value of the Cash flow, where there is a change in the increase of Goodwill in case of payment of Dividends, differs by 0.012 - 0.013 points depending on the specific scenario. However, in general, you can see that the lower the Cash flow, the more Goodwill you will get with the same payment of Dividends.

 

Cumulative effect

Effect of Dividend payment remains almost unchanged until the last period. Diagram shows the dependence of the Goodwill factor “Dividend” on the Dividends paid in 1 period of the round 14C1-RU 2014-1 MSK.

 

Diagram below shows difference in the increase of Goodwill from the same payment of Dividends from difference in the absolute value of Cash flow.

 

Change of Goodwill factor “Dividends” depending on the total value of Dividends payment for 2 periods of the round 14C1-RU 2014-1 MSK.

 

The same for 3 periods.

 

The same for 4 periods.

 

Despite equal amount of Dividends payment, the absolute value of the Goodwill factor “Dividend” may vary significantly (up to 0.05) depending on Cash flow. Example, 2 teams paid 11% and 13% of Dividends for 4 periods according to the scheme:

  1. Dividend payment 1 team: 2% - 2% - 3% - 4% = 11%
  2. Dividend payment 2 team: 1% - 1% - 1% - 10% = 13%

 

As a result, difference in Goodwill factor “Dividends” was only 0.001 points:

  1. Goodwill factor “Dividend” 1 team: 1,056
  2. Goodwill factor “Dividend” 2 team: 1,057

 

Hints:

  1. Goodwill factor “Dividends” can vary between 0.938 - 1.116 (1.116 is the maximum value actually achieved with a total payment of 39% for 5 periods, the absolute limit has not been identified and is probably absent).
  2. Value of the Goodwill factor “Dividend” depends on value in previous period and has cumulative effect, but does not depend on decisions of competitors in the group.
  3. Dependence of the Goodwill factor “Dividend” on Dividend payment is represented by a power function.
  4. Optimal strategy will be calculate the total payment of Dividends for all periods and divide them evenly into 5 periods, which will allow you to get the maximum total increase in Goodwill, taking into account the power distribution function of Goodwill from the payment of Dividends.
  5. If possible, transfer payment of majority of Dividends to 1 and 2 periods, where the minimum value of Cash flow is reached (it is negative), which will give an additional bonus.

 

Automatic forecast of Goodwill and Investment performance is built into the Calculation model, which can be purchased in our store.