International Financial Management: Analysis of British American Tobacco's Dividend Distribution Policy, Efficient Market Hypothesis Theory, and Project Appraisal Methods

This report analyzes British American Tobacco's dividend distribution policy, efficient market hypothesis theory, and project appraisal methods in the context of international financial management. It critically evaluates the company's methods and provides insights into its financial performance.

Assessment 1
International Financial
Management

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BOSY..................................................................................................................................................3
Critically analyses and evaluate chosen multinational corporation’s dividend distribution policy..........3
Critically analyse the efficient market hypothesis theory in the context of your chosen multinational
corporation’s operations.........................................................................................................................5
Critically analyse and evaluate your chosen multinational corporation’s methods of appraising
projects....................................................................................................................................................7
CONCLUSION...............................................................................................................................................8
REFERENCES................................................................................................................................................9

INTRODUCTION
International financial management, often known as international finance, is the
management of money in a global business context, encompassing everything from marketing
and generating revenue to fiat currency translation. Companies will benefit from foreign
financial activity by engaging with international business associates including customers,
contractors, and financing (Dienes and Bács, 2020). It is also used by government agencies and
non-profit organizations. This report based on the British American Tobacco plc is a Global
corporation that produces and distributes cigarettes, tobacco, and other nicotine-containing
goods. The firm was founded in 1902 and is based in London, England. Change in net revenues,
it is the nation's biggest tobacco corporation as of 2019. In this report consist of dividend
distribution policy and market hypothesis theory in context of selected company.
MAIN BOSY
Critically analyses and evaluate chosen multinational corporation’s dividend distribution policy
British American Tobacco has streamlined the process of distributing profits to
shareholders though by depositing dividend payments into a company's separate bank account.
Required direct credit is the term for this situation. Dividend checks are no longer issued by
British American Tobacco. Computershare has notified investors listed on the UK primary
registration as getting dividend payments by cheques of the adjustment. Such owners must adopt
the necessary actions as outlined in the Holdings warning by choosing the applicable alternative.
Investors on the UK primary registration whom have received their dividend payments: (1)
by loans extended into their UK banking or saving societies accounts; (2) through to the
Euroclear business that use the CREST communication system; or (3) are unaffected by this
modification because they use Computershare's International Payment Platform (GPS).
Therefore, maybe they want to resign from the British American Tobacco Dividend Payments
Plan (DRIP), investors who engage in the DRIP are not obliged to accept additional actions.
Several of our investors have indeed benefited from these services; if you've not done so, you
should think about signing up (A'isya and Vestari, 2019).

The Board of Directors confirmed an interim dividend of 215.6p per common shares of 25p for
the year ended December 31, 2020, shall be due in 4 equal half - yearly installment payments of
53.9p per common shares in May 2021, August 2021, November 2021, and February 2022,
according to a press release dated February 17, 2021. The management of British American
Tobacco PLC (LON:BATS) has stated that the company's dividend would be increased to
UK£0.54 on November 11th. This raises the dividend growth to an excellent 7.7%, giving
shareholders a good increase in returns. Whereas a high dividend yield is desirable, we must also
assess if the payout is sustainable. Even though the last payout accounted for 75% of earnings,
investment returns were significantly greater. This provides a lot of money to put back into the
company (Ebaid, 2021).
From over coming year, earnings per share are expected to increase by 7.4 percent. If indeed the
payout keeps rising at its current rate, we predict the payout ratio would reach 76 percent, which
is a bit too high but still manageable. The firm has a lengthy dividend history, but cutbacks in the
past haven't been kind. In 2011, the first yearly payment was made in the amount of UK£1.14,
though the most latest financial year payout was in the amount of UK£2.16. With a shaky
dividend, it's even more vital to assess if profits per share are rising, implying a rising payout in

the coming. Earnings per share have been steadily increasing at a rate of 3.9 percent each year.
The operating income of British American Tobacco has scarcely increased, which is not optimal;
maybe that's why the firm gives out the bulk of its profits to stockholders. That's excellent in
theory, and we're less excited because this frequently indicates that the dividend will rise more
slowly in the term (Perjuci, Ismajli and Bunjaku, 2019).
Critically analyse the efficient market hypothesis theory in the context of your chosen
multinational corporation’s operations
For many people, the goal of investment is to earn bigger benefits than the market as a
whole. However, the fundamental goal is to discover sufficient victors to outnumber the losses.
Several investors may be reconsidering their position in British American Tobacco p.l.c.
(LON:BATS) at this time, given the stock's 35 percent decline in the previous 5 years. In the past
seven weeks, it has gained 1.2 percent. Although some people still believe in the efficient
markets concept, it has been proved that markets are overly responsive nonlinear dynamics, and
traders are sometimes not logical. Comparing the change in profits per share (EPS) with the
stock price changes is an imprecise but basic technique to examine how the market opinion of a
firm has moved (Hosseiniol, Heidarpoor and Tariverdi, 2019).
British American Tobacco's profits per share (EPS) increased by 3.9 percent each year at
the terrible quarter when the stock price dropped. Certain the stock market's response, one may
conclude that EPS isn't a strong indicator of a firm's earnings over a given period of time
(perhaps due to a one-off loss or gain). However, yearly development estimates may have been
unrealistic.

Depending on such figures, we believe the market was overly enthusiastic about future growth
half a decade ago. However, examining at other data may give us a better understanding of
what's happening on with the company. The constant dividend isn't enough to justify why so
stock price is falling. They don't know why the market price fluctuates right now, but more
investigation might lead to some solutions. It's important to mention that we've seen a lot of
insiders purchasing in the latest quarter, which we think is a good indicator. However, we believe
that profit and sales growth patterns are much more relevant considerations. This dynamic graph
of future earnings forecasts shows what experts anticipate for British American Tobacco
(Akande, 2020).
Even after dividends, British American Tobacco stockholders have lost 7.1 percent this
year, while the market has gained 21 percent. Please remember, though, that even the strongest
companies might underperformed the market over the course of a year. Unfortunately, that year's
result was the worst in a five-year period, with stockholders suffering a total loss of 3% each
year. Lengthy share price decline is often a poor indicator; however adventurous traders may

wish to investigate the stock in the hopes of a reversal. I think it's fascinating to use share price
as a barometer for company overall performance.
Critically analyse and evaluate your chosen multinational corporation’s methods of appraising
projects
The profitability and sustainability of significant investment endeavors are often subject to a
mostly or even fully unexpected future, containing uncertainties and a variety of risks. They
examine significant challenges and issues of building evaluation methods, including prospective
hazards, appropriate risk analysis, project longevity, and enterprise interconnectedness. The
benefits and drawbacks of the most common project evaluation approaches are examined.
Consuming, productivity gains, predicted revenues, a range of forecasts, and expected
profitability are some of the factors considered in financial evaluation. It is suggested that a key
profitability goal should be considered, because this will regulate other aspects of the firm
including revenue, acquisitions, and expenditures. It would be essential to determine the
percentage of orders required to fracture level. In order to forecast sales volume, the desire for
the products will certainly be examined. As a result, the quantity of transactions must be
carefully calculated, as it is a major determining element in the company's profitability (Dewi
and Dewi, 2019).
To grow revenues, acquire customer base, make it more appealing, and keep existing
consumers, firms in most advanced countries employ a wide range of marketing tactics. Design
work, marketing, price, delivery, product endorsements, marketing, and a range of promotional
work are all examples of such strategies. Cigarettes and other tobacco products have long been
one of the most actively promoted consumer items in the United States, and tobacco businesses
were among the first to devise and apply effective, coordinated sales techniques. Tobacco
corporations have claimed repeatedly that the goal of spending huge amounts of money on
cigarette advertising is to recruit and retain current adult smokers to their brands. Furthermore,
the corporations deny that their marketing strategies are designed to raise cigarette consumption
among current smokers or to persuade people to start smoking. Although most trademarks are
controlled by a few tobacco firms, changing trademarks would have little influence on the
earnings of any one of them. The most conceivable argument for advertising spending at these

levels is to recruit new clients in order to produce lengthy working capital for the businesses
(Unachukwu, 2019).
CONCLUSION
According to the aforementioned research, international finance is the management of
financial connections between various countries. Foreign capital and currency changes in the
monetary sector are examples of topics covered by global finance. The financial business has
grown in importance as a result of increased globalization.

REFERENCES
Books and Journal
Dienes, A. and Bács, B. A., 2020. CONSOLIDATED FINANCIAL STATEMENTS
APPLYING NATIONAL AND INTERNATIONAL FINANCIAL REPORTING
REGULATIONS. SEA: Practical Application of Science. 8(3).
A'isya, R. D. and Vestari, M., 2019. Pengaruh Bonus Plan, Debt Covenant, Political Cost, dan
Litigation Risk terhadap Konservatisme Akuntansi pasca Konvergensi International
Financial Reporting Standards. Seminar Nasional dan The 6th Call For Syariah Paper
(SANCALL) 2019.
Ebaid, I. E. S., 2021. Incorporating International Financial Reporting Standards (IFRS) into
Accounting Curricula: Perceptions of Undergraduate Accounting Students in Saudi
Universities. Journal of Advanced Research in Economics and Administrative
Sciences. 2(2). pp.1-15.
Hosseiniol, A. M., Heidarpoor, F. and Tariverdi, Y., 2019. The Islamic Financial Reporting
Goals and convergence with International Financial Reporting Standards (IFRS).
Akande, A. A., 2020. International Financial Reporting Standards’ and Performance of
Manufacturing Firms in Nigeria,(2014-2018).
Dewi, A. A. and Dewi, L. G. K., 2019. International Financial Reporting Standard (IFRS): The
Awareness Level In Accounting Student. AKRUAL: Jurnal Akuntansi. 10(2). pp.157-176.
Unachukwu, J. C., 2019. Implementation of International Financial Reporting Standard as a Tool
for the Performance of Nigerian Insurance Companies. Asian Journal of Advanced
Research and Reports, pp.1-10.
Perjuci, E., Ismajli, H. and Bunjaku, A., 2019. Adoption of International Financial Reporting
Standards (IFRSs) and their Impact on Loan Terms: Kosovo Case. Audit
Financiar. 17(153).
Online
Dividend distribution policy. 2021. [Online]. Available through; <
https://finance.yahoo.com/news/british-american-tobaccos-lon-bats-000038452.html>
Market hypothesis. 2021. [Online]. Available through; < https://finance.yahoo.com/news/much-
did-british-american-tobaccos-002324831.html>