flotation cost

(redirected from Flotation Costs)

Flotation Cost

The costs that a company incurs when it makes a new issue of either stocks or bonds. Flotation costs include the costs of printing the certificates, paying the underwriters, government fees, and other associated costs. As new issues are intended to raise capital for the company, it is important for it to ensure that it will at least make back what it spends.

flotation cost

The expense involved in selling a new security issue. This expense includes items such as registration of the issue and payment to the investment banker. Flotation costs depend on the size and riskiness of an issue as well as on the type of security to be sold.
References in periodicals archive ?
IAS 32 requires that flotation costs are treated as a revenue item rather than
Hilton Food Group yesterday posted a lower pre-tax profit in the first half mainly due to a restructuring and flotation costs, but said current trading is in line with its expectations.
6m pounds (up 13%), excluding exceptional flotation costs.
This measure includes cash flotation costs (consisting of the underwriting spread and fees associated with administration, registration, and legal services) and underpricing.
Detailed operating cost estimates are currently being prepared but initial estimates show crushing, grinding and flotation costs of approximately US$10 per tonne and general and administration costs of about US$5 per tonne.
The loss for the six months of A[pounds sterling]109,392 includes flotation costs of A[pounds sterling]96,890,
In May the firm announced full-year pre-tax profit before flotation costs and property transactions up 27 per cent to pounds 14.
RDF said pre-tax profits before flotation costs and one-off accountancy matters had risen 46% to pounds 2.
However, the deficit arose through investments to meet EU supply criteria, and the flotation costs, cleverly though these had been approached.
To explain this behavior with a clientele theory, whereby "corporations provide payout ratios that correspond to investors' preferences for payouts" (Miller and Modigliani |14^), would require that clientele members' tax penalties plus the firms' flotation costs be sufficiently below the net transaction cost of receiving the income as capital gains.
May Gurney, the support and construction services company which recently acquired Staffordshire-based mechanical and electrical engineering specialists AC Chesters & Son, has posted full-year pretax profit before flotation costs and property transactions up 27 per cent to pounds 14.
Their evidence indicates that flotation costs of debt and market volatility effect the choice.