LCBB6002 - UPS: Dividend Policy, Efficient Market Hypothesis Analysis

This essay provides a detailed analysis of United Parcel Service's (UPS) international financial management practices. It critically evaluates the company's dividend distribution policy, examining its dividend yield, payout ratio, and history of dividend modifications. The essay also analyzes the efficient market hypothesis in the context of UPS's operations, considering factors such as barriers to entry, e-commerce expansion, and cost-effective field development. Furthermore, it evaluates UPS's methods of appraising projects, focusing on cost-benefit analysis and its role in the company's transportation system. The analysis draws upon various sources to provide a comprehensive understanding of UPS's financial strategies and challenges in the international financial landscape.

International Financial
Management

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY.................................................................................................................................................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.........................................................................................................................6
Critically analyse and evaluate your chosen multinational corporation’s methods of appraising
projects....................................................................................................................................................7
CONCLUSION...............................................................................................................................................8
REFERENCES................................................................................................................................................9

INTRODUCTION
International finance is the study of financial ties among multiple nations. International
finance covers subjects such as foreign capital and currency fluctuations in the economic model.
As a consequence enhanced globalization, world financial has become more important. The
United Parcel Service (UPS, stylized as ups) is a global major port and provision relating
organisation located in the United States, according to this research (Osipov, Ziyatdinova and
Girfanova, 2018). It was established in 1907. UPS originated as the United Parcel Service, a
telegraph company, and has since grown to become a profitable company and one of the largest
transportation services in the country. UPS will be the country's largest messaging company by
sales in 2020, with around US$85 billion in sales, surpassing competitors DHL and FedEx. The
dividend distribution policy and examination of the efficient market hypothesis theory in relation
of UPS are included in this study. In furthermore, assess the methodologies used by big
businesses to appraise initiatives.
MAIN BODY
Critically analyses and evaluate chosen multinational corporation’s dividend distribution policy
The UPS dividend yield varies considering the current stock price of UPS. The payout
ratio for UPS is rather high. It's getting close to hitting its 3 to 5% dividend yield target. UPS
pays out dividends every three months, or 4 times per year. Every year, UPS provides benefits in
the period from March, June, July, and December. This revenue allocation approach is used by a
number of American firms. The company has a lengthy history of boosting its payout year after
year. The UPS dividend has been modified on an annual basis since 2010. It's probable that the
yearly upward trend may grow forever. The firm, meanwhile, stopped increasing dividends in
2009. They did so to get through current downturn's difficulties (Hashim and Piatti, 2018).

Figure 1 Dividend policy of USP. 2021
To receive the very next UPS dividend yield, a buyer must complete their purchase of
UPS stocks much before the ex-dividend date. Whenever payments are made, the UPS delivery
period is normally it around 20th of the monthly. UPS's most recent dividend increase was barely
1%. United Parcel Service, Inc. (UPS) will cut off trade ex-dividend on August 20, 2021. The
firm will pay out dividends of $1.02 per share on September 9, 2021. UPS shareholders who
purchased the shares first before ex-dividend period are eligible for the money dividend payment
(Darmawan, Suryadi, and Riduan Syafari, 2021). For the third quarter in a row, UPS has paid its
same payout. At $194.8 in share price, the dividend yield is 2.09 percent. The current selling
price for UPS was $194.8, which was down -11.29 percent from the 52-week high of $219.59
but up 25.98 percentage from the 52-week low of $154.63.
Statics for 5 years

Compound Annual Dividend growth
Figure 2 Compound annual dividend growth, 2021
Dividend payout history of UPS
Figure 3 Dividend payout history, 2021
Dividends are generally paid from a company's performance, so if it pays out more than it makes,
payouts are prone to be affected. United Parcel Service distributed 58 percent of its profits to
stockholders a year, which is standard of most firms. It's also worth looking at whether United
Parcel Service generated enough fresh cash flow to cover its payout. In the preceding quarter,
meanwhile, it only distributed 43% of its net profits. It's encouraging to see that the dividend is
supported by both revenue and capital investments. This demonstrates that the dividend will be

maintained as long as earnings do not decrease precipitously (Remenarić, Čevizović and
Kenfelja, 2018).
Critically analyse the efficient market hypothesis theory in the context of your chosen
multinational corporation’s operations
The efficient market hypothesis, often known as the efficient market hypothesis, claims that
valuations reflect all available information and that long-term alpha generation are implausible.
According to the EMH, businesses on platforms continually fluctuate at their fair value,
rendering it extremely hard for purchasers to invest in inexpensive stocks or purchase at
outrageous rates. As a consequence, exceeding the overall market with expert receiving orders or
picking stocks should be tough, and the only degree to which the individual can generate
superior profits is to acquire risky assets (Myende, Samuel and Pillay, 2018).
UPS has a Buy rating predicated on a $129.47 price target, which represents a 23.3 percent
increase in speed over the April 7, 2017 selling value of $104.99 a share. The recommendation
has been affected by three factors.
1. High barriers to entry - UPS have a 57 percent of the global in residential messengers and
courier services, comparing to FedEx and USPS, who are its two main competitors.
2. Expansion of e-commerce and healthcare transportation – UPS is well positioned to gain from
the increase in e-commerce either domestically and overseas, leading to increased profitability.
Furthermore, its current medical transportation acquisitions will enable it to benefit from the
worldwide biopharma industry's development.
3. Cost-effective field development — Across UPS's Supply Chain and Logistics Solutions
business, ORION logistics technology will strive to reduce costs, increase revenues, and widen
the reach of its logistically service firm (Jack and et.al, 2019).

In well before activity on Tuesday, United Parcel Service, Inc. (UPS) is up around 4% after
outperforming earnings forecasts for the 4 early 2020 by a considerable margin. The company
received $2.66 per piece in the third quarter, $0.52 higher than expectations, while revenues
grew 21.0 % annually to $24.9 billion, much above the $22.8 billion norm. Due to the
unpredictability of the pandemic, no recommendations for 2021 have been made, and no
preferred shares are anticipated per year. In 2013, the stock surged over the $89.11 high set in
2004, initiating a jagged ascent that ended in a record of $114 during first quarters of 2015. It hit
two bottoms in the first half of 2016, but after trying to break out in November, it went upward.
A further breakout attempt during first three months of 2018 failed, triggering an investment
exodus that resulted in statistically sustained and much worse low points through March 2020,
when the market hit a seven-year bottom.
A vertical rebound in August touched the 2018 peak of $135.53, setting the stage for a rapid
breakout to the all peak of $178.01 in October. The stock plummeted into the $150s a few days
later, establishing area barrier which has already been rigorously examined. The pre-market rise,
on either extreme, has been coming up against resistance around the 50-day exponential
smoothing (EMA), which might limit further gains in the coming sectors. Considering that
stocks have declined to six-month lows ahead of the release, this isn't surprising (Baker, Kumar
and Pandey, 2020).
Critically analyse and evaluate your chosen multinational corporation’s methods of appraising
projects
If a firm seeks to know answers to a specific organizational problem and identify the best
place to implement that answer into practise, it must design and build initiatives that will provide

an efficient method for fixing the problem and implementing a solution. This company will have
to evaluate the potential project to verify that it is actually effective in terms of delivering a good
solution and fixing the problem. In this setting, project evaluation management is a key means of
examining and evaluating the programme. (a) Net Realizable Values (b) Cost Benefit Ratio, (c)
Internal Rate of Return, and (d) Method are discounting approaches for project evaluation that
keep in mind the historical value of money (Drobyazko and et.al, 2020).
United Parcel Service does a cost-benefit analysis to evaluate their task success. This
strategy is used by the majority of transport businesses since it allows them to accurately grasp a
project in a broad sense. Costing system becomes a widely used and well-understood tool for
evaluating prospective infrastructure improvements. This paper presents our viewpoint on the
role and location of CBA in UPS's transportation system, that is based largely on a study of
numerous countries wherein CBA has a specific role in decision-making. The technique,
objectives, and possible uses, as per the research, are generally equivalent across countries. The
CBA findings are incorporated into a comprehensive evaluation system in UPS, which includes a
variety of non-monetized compensation.
CBA has several advantages, such as the fight to overcome intellectual, physiological,
and procedural limitations, as well as biases in judgement. Many of the most major barriers to
CBA and autonomous economics in particularly are the macroeconomic and regulatory context.
CBA typically runs the risk of showing up too currently in the planning process to make a major
difference. This danger tends to increase if processes are centred around with a supposed
"problem." Despite the reality that the concept of "problem" is frequently arbitrary, pricey
solutions may be regarded preferable than this until the condition is considered bad enough
(Aghababaei and Khademi, 2019).
CONCLUSION
It may be stated from the preceding study that international money plays a vital role in
preserving foreign relations. The norms and guidelines imposed underneath this aid in the
resolution of any financial issues. This entails making investments in foreign nations in order to
receive dividends in exchange. This sum is dispersed among some of the countries in line with
the nations or firm's dividends paid policies. However, while investing money, the purchasing
parties should examine the capital value using the market hypothesis theory. Organizations can

evaluate their investment possibility using a variety of approaches. This will aid them in
determining which development is the most beneficial.

REFERENCES
Books and Journal
Osipov, P., Ziyatdinova, J. and Girfanova, E., 2018, September. Factors and barriers in training
financial management professionals. In International Conference on Interactive
Collaborative Learning (pp. 167-175). Springer, Cham.
Hashim, A. and Piatti, M., 2018. Lessons from reforming financial management information
systems: a review of the evidence. World Bank Policy Research Working Paper, (8312).
Darmawan, H., Suryadi, B. and Riduan Syafari, M., 2021. Effectiveness of Village Financial
Management An approach to The Output Equation.
Remenarić, B., Čevizović, I. and Kenfelja, I., 2018. Binomial model for measuring expected
credit losses from trade receivables in non-financial sector entities. Ekonomski
Vjesnik, 31(1), pp.125-135.
Aghababaei, M. E. and Khademi, S., 2019. Factors affecting personal financial management
behaviors–The case of Iranian youth. Financial Management Strategy. 7(1). pp.123-143.
Drobyazko, S. and et.al, 2020. Risk management in the system of financial stability of the
service enterprise. Journal of Risk and Financial Management. 13(12). p.300.
Baker, H. K., Kumar, S. and Pandey, N., 2020. A bibliometric analysis of European Financial
Managementʼs first 25 years. European Financial Management. 26(5). pp.1224-1260.
Jack, R. and et.al, 2019. Internationalisation of Chinese banks and financial institutions and its
implications for IHRM. The International Journal of Human Resource
Management. 30(14). pp.2121-2136.
Myende, P. E., Samuel, M. A. and Pillay, A., 2018. Novice rural principals’ successful
leadership practices in financial management: Multiple accountabilities. South African
Journal of Education. 38(2). pp.1-11.