Target Capital Method with a Surplus

If you use the Target Capital Structure method and your forecast results in a category surplus before funding, Strategic Finance distributes the category surplus based on your funding order. Some examples:

  • Affordable Dividend Affordable dividend may be used to dividend excess equity, lowering retained equity in line with the forecasted time series of debt (and preferred, if specified) capacity. This is like an increase in regular dividends or declaration and payment of special dividends to shareholders.


    In the Target Capital Structure - Equity category, Affordable Dividend is the default balancing account in “Apply Surplus” and “Fund Deficit”.

  • Repurchase of Capital Stock

    Another option when you experience an equity category surplus is to repurchase your stock from your shareholders. Shares are repurchased at the Transaction Price for Common Shares. The number of shares authorized for repurchase is established in the Treasury Shares (Year-End) account.