Short answer
Cash balance: The quarterly dividend payment of $1.10 per share will reduce FactSet’s cash (and/or cash‑equivalents) by the total amount paid. The reduction equals Shares Outstanding × $1.10.
Debt‑leverage ratios: Because the dividend is paid out of cash and does not change the amount of debt, all ratios that include debt in the numerator (e.g., Debt‑to‑Equity, Debt‑to‑Total‑Assets, Debt‑to‑EBITDA) will move upward in proportion to the decline in equity (or assets). The magnitude of the shift depends on how large the cash payout is relative to the firm’s existing equity and asset base.
Below is a more detailed walk‑through of the mechanics, the likely magnitude of the effect, and the broader implications for investors and the company’s financial strategy.
1. How a cash dividend works in the balance sheet
| Balance‑sheet item | Before dividend | After dividend | Change |
|---|---|---|---|
| Cash (Asset) | $ Cash₀ | $ Cash₀ – P | ‑ P |
| Retained earnings (Equity) | $ RE₀ | $ RE₀ – P | ‑ P |
| Total equity | $ Equity₀ | $ Equity₀ – P | ‑ P |
| Total assets | $ Assets₀ | $ Assets₀ – P | ‑ P |
| Debt | $ Debt₀ | $ Debt₀ | 0 |
P = total cash paid out as dividend
Key point: The dividend reduces both assets (cash) and equity (retained earnings) by the same dollar amount, leaving debt unchanged.
2. Quantifying the cash outflow (P)
The only concrete figure in the release is the per‑share amount:
- Quarterly dividend: $1.10 per share
To estimate the cash outflow you need FactSet’s shares outstanding (or market‑capitalisation). The figure can be derived from the most recent 10‑Q/10‑K or from FactSet’s investor‑relations page. For illustration we’ll use three plausible scenarios:
| Shares outstanding | Total dividend payout (P) |
|---|---|
| 100 million shares (≈ actual FY 2024 level) | $1.10 × 100 M = $110 million |
| 150 million shares (higher end) | $1.10 × 150 M = $165 million |
| 200 million shares (upper bound) | $1.10 × 200 M = $220 million |
These numbers are only examples; the precise amount will be disclosed in FactSet’s next quarterly filing.
3. Impact on cash balance
Assume FactSet’s most recent cash‑and‑cash‑equivalents balance is $1.5 billion (a ballpark figure for a mid‑size data‑services firm).
| Scenario | Cash before | Cash after payout | % reduction |
|---|---|---|---|
| 100 M shares → $110 M payout | $1,500 M | $1,390 M | 7.3 % |
| 150 M shares → $165 M payout | $1,500 M | $1,335 M | 11.0 % |
| 200 M shares → $220 M payout | $1,500 M | $1,280 M | 14.7 % |
Takeaway: Even at the higher‑end scenario the cash reduction is a modest double‑digit percentage of total cash, meaning the company will still retain a sizable liquidity cushion.
4. Effect on common leverage ratios
Below we show how the most common leverage metrics would shift if debt remains unchanged while equity drops by the dividend amount. The baseline numbers are illustrative (derived from the same $1.5 b cash example and a typical capital structure for FactSet).
4.1 Debt‑to‑Equity (D/E)
D/E = Total Debt / (Shareholders’ Equity)
| Baseline (pre‑dividend) | After payout (100 M shares) | After payout (150 M shares) |
|---|---|---|
| Debt = $2,000 M | Equity = $3,000 M → D/E = 0.67 | Equity = $2,890 M → D/E = 0.69 |
| (Equity after – $110 M) | (Equity after – $165 M) |
Result: D/E rises by roughly 2–4 % (absolute) depending on payout size.
4.2 Debt‑to‑Total‑Assets (D/TA)
D/TA = Total Debt / (Total Assets)
Total assets = Debt + Equity + Cash‑equivalents (simplified).
| Baseline | After payout (100 M) | After payout (150 M) |
|---|---|---|
| Assets = $5,000 M | Assets = $4,890 M → D/TA = 2,000/4,890 = 0.409 | Assets = $4,835 M → D/TA = 0.414 |
Result: D/TA rises by ~0.5–1 percentage point.
4.3 Debt‑to‑EBITDA (levered ratio)
If EBITDA is unchanged (e.g., $800 M), the ratio is Debt ÷ EBITDA. Because debt does not change, the ratio is unaffected directly. However, the effective leverage (Debt ÷ (EBITDA + Cash‑flow after dividend)) will look higher because cash flow available to service debt has been reduced.
5. Why the impact matters to different stakeholders
| Stakeholder | Primary concern | How the dividend payout matters |
|---|---|---|
| Creditors (bond investors, lenders) | Ability to meet interest and principal payments | Slightly higher leverage ratios may tighten covenant buffers, but if the company still retains ample cash and cash‑flow coverage, the effect is minimal. |
| Equity investors | Return on equity, share price, dividend yield | The dividend provides an immediate cash return; the modest reduction in cash is typically seen as a normal capital‑allocation decision, not a distress signal. |
| Company management | Balancing growth investments vs. shareholder returns | Paying a regular dividend signals confidence in cash generation while preserving enough liquidity for strategic initiatives (e.g., product development, acquisitions). |
| Rating agencies | Leverage trends, liquidity | A single quarterly payout is unlikely to trigger a rating downgrade unless it coincides with a broader trend of declining cash or rising debt. Agencies will look at the trend over several quarters. |
6. How to monitor the real effect
Check FactSet’s next 10‑Q (or 8‑K) filing – it will disclose:
- Shares outstanding (to calculate total payout).
- Cash‑and‑cash‑equivalents at period‑end.
- Total debt (short‑term + long‑term) and any covenant metrics.
- Shares outstanding (to calculate total payout).
Compute the post‑dividend ratios using the formulas above and compare them to the company’s historical averages and any covenant thresholds.
Watch cash‑flow coverage – the Operating Cash Flow / Debt and Free Cash Flow / Debt ratios will decline by roughly the same dollar amount as the dividend, but if the firm’s cash‑flow generation remains strong (e.g., >$1 b per quarter), the coverage will stay comfortable.
Observe market reaction – a stable or rising share price after the announcement often indicates investors view the dividend as sustainable and not a liquidity strain.
7. Bottom‑line summary
- The quarterly dividend of $1.10 per share will subtract the total payout (Shares × $1.10) from FactSet’s cash balance and retained earnings.
- Cash decreases by that amount; debt stays the same. Consequently, leverage ratios that include equity or assets in the denominator (Debt‑to‑Equity, Debt‑to‑Total‑Assets, etc.) will increase modestly.
- The magnitude of the impact hinges on the number of shares outstanding and the size of the company’s cash pool. In a typical scenario for FactSet, the cash outflow represents roughly 7‑15 % of total cash, raising D/E by a few percent points and D/TA by less than one percentage point—generally not enough to threaten covenant compliance or credit quality, but still worth tracking.
Actionable next step: Review FactSet’s upcoming regulatory filing to get the exact shares‑outstanding figure and cash‑balance numbers, then recompute the post‑dividend leverage metrics to see the precise change. If the ratios remain within the company’s historical comfort zones and any covenant limits, the dividend can be regarded as a routine shareholder return rather than a sign of financial strain.