ACCA Strategic Professional · Advanced Performance Management · Financial performance measurement
At the start of the year Brindle Ltd's share price was $4.00. During the year it paid a dividend of $0.20 per share and the closing share price was $4.60. Ignoring reinvestment of dividends and taxes, what was Brindle's total shareholder return (TSR) for the year?
TSR is 20%. The shareholder gained $0.60 of share price growth plus a $0.20 dividend, a total of $0.80 on an opening price of $4.00. Using only price growth would give 15%, understating the return because dividends are part of total shareholder return.
- A15.0%
- B20.0%Correct
- C5.0%
- D10.0%
Explanation
TSR = (closing price - opening price + dividend) / opening price = (4.60 - 4.00 + 0.20) / 4.00 = 0.80/4.00 = 20%. Option A ignores the dividend, which gives capital growth of only 15%.
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