A diversified mid-sized manufacturer of kitchen tools contemplates a stock repurchase in response to an unsolicited takeover. The company must determine the. BLAINE KITCHENWARE Case Exhibit 1 Operating Results: . beta calculation is based on a constant capital structure 1 Un-levered beta is the . 年5月14日 Blaine Kitchenware:Capital Structure Summary: Blaine Kitchenware, Inc. was founded in and as a mid-sized producer of branded small.
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Following is the operating results for inc.capitao year when the capital structure is levered and unlevered. Kitchennware company must determine the optimal debt capacity and capital structure, and subsequently estimate the resulting change in firm value and stock price. The case is set in earlynearly two years after significant modifications in these systems and procedures. Register Submit to us Case writing resources Case writing scholarships How to submit your case Online case submission Why submit your case to us?
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Teaching note supplement software. Tax ID No It is a form of returning the money back to shareholders and the shareholders who are out there for investment blqine feel it a better option to stay their money invested in a growing company instead of receiving petty dividends. As a non family member, the stock repurchase will make me more skeptical because the shares owned kotchenware the family is rising exponentially and hence making it more dominant.
dtructure If you are the original author of this content and no longer wish to have it published on our website then please click on the link below to request removal:. The company has been earning profit and it should seek and endeavor further growth opportunities instead of returning it back to shareholders.
Interest 0 Earnings Before Tax 77, 74, Less: The modifications to its capital budgeting procedures are partly intended to support the company’s efforts to continue this success. Since they are totally equity financed, there is no tax shield. Each of us is qualified to a high level in our area of expertise, and we can write struxture a fully researched, fully referenced complete original answer to your essay question.
Blaine Kitchenware, Inc.: Capital Structure (Brief Case)
Both solutions improve the financial level benefit and maximize the company value. Dividend payout ratio 0. The company must determine the optimal debt capacity and capital structure, and subsequently estimate the resulting change in firm value and stock price. Relevant information for decision: Keep up to date with email updates Pricing Shipping options Terms of business What’s available from us?
BKI has a substantial liquidity. This page has approximately words. InBlaine planned to continue its policy of holding prices firm in the face of competitive pressures. Medicine essays Miscellaneous essays Psychology essays Religious studies essays Science essays Sociology essays Essays menu. Teaching Note HBS Case Collection January Revised October Tombstones This case consists primarily of excerpts from term sheets and prospectuses for six securities offerings made by US companies duringjust after the financial crisis and recession of Debt being a cheap source of finance and given the industry standards confirming the availability of the debt as well as the conformity by the rivals in subscribing to the debt capital, it seems wise to have a levered capital structure instead of having a completely unlevered one as it would have affected the cost of capital of the company.
Since Blaine Kitchenware is a public company with large portion of its shares held by their family members, they have a financial surplus, which decreases the efficiency of its leverage.
BKI can borrow money to buy back its own shares or use its funds to repurchase shares. Or prevent it from making future acquisitions?
Inc.capitak would such a buyback affect Blaine? The debt capital has been procured at very less cost when compared to equity and hence the WACC has reduced from In Blaine still planned to continue its policy of holding prices firm in the face of competitive pressures. Essay UK – http: Finance Globalization Health Care. Cost of capital when the company is unlevered Dividend per share D1 0.
The Case Centre is dedicated to advancing the case method worldwide, sharing kitchenwzre, wisdom and experience to inspire and transform business education across the globe. However, concluding whether an unlevered oitchenware a levered capital structure is appropriate for a company largely depends on the industry debt equity ratio i.
Their management will have increased stakes, this will reduce their chance of being acquired and this will provide more dividends to their remaining shareholders.
Blaine Kitchenware, Inc. Capital Structure_百度文库
Finally, BKI had undertaken a strategy focused on rounding out and complementing its product offerings by acquiring small independent manufacturers or the kitchen appliance product lines of large diversified manufacturers The company carefully followed changes in customer purchasing behavior and market trends.
View our structute guide or login to see prices. However, the company must guard itself from getting over-levered.