American Chemical Corporation Analysis

Issuing additional debt to finance the company expansion would worsen the company’s debt ratio as it is already more than average. The company envisions to be profitable by raising capital from existing stockholders by issuing common stock through rights offering.

Production line workers are the employees who are usually doing their work by hand or in this day and age, running the machine or equipment to make the products. In this particular case, Canada Chemicals Corporation utilizes their production employees by producing industrial chemicals. These production worker’s jobs are a lot more complete then other production level workers employees as they usually have plenty of skill, knowledge and experience, and have high educational background. In order to reverse recent challenges with production and sales, I have composed a compensation package for these employees that will motivate them intrinsically, and focus on rewards that are extrinsic.

Our approach to valuing the processing plant can easily be decomposed into three distinct steps first, find the value of the foreseeable free cash flows. Next, calculate the terminal value of the project. Finally, take the present value of those flows. The next few paragraphs walk through each of these steps in order of progression.

The firm has decided to increase the debt finance component portion from 20% to 30% which is a good decision since the interest payments are 100% tax deductible. The appropriate capital structure would be to

The statement of cash flows outlines some of the changes to the capital structure. The company added $164.5 million in a consolidated loan facility, and it paid out $138.1 million in dividends. There were no share buybacks during the year. The company states in the annual report (p.4) that it intends to maintain a conservative gearing ratio. The company in this section attributes its increased borrowings to projects and opportunities on which it has embarked. These investments lie within the integrated retail, franchise and property system. One of the

from the multiple rounds of financing. How has this capital structure affected the offer from

Managing debt levels to maintain an investment grade credit rating as well as operate with an efficient capital structure for its growth plans and industry

The net present value (NPV) of each option has been calculated and included in Table 1, based on figures from the study group report. Unfortunately, these figures are flawed in the same manner as Wriston’s current performance and accounting mechanisms in that they don’t properly allocate revenue, nor do they recognize inherent manufacturing complexities. The plant closure option’s expected operational gain seems particularly suspect. A better valuation of the new plant options is perhaps

This step involves short and long term debt equity analysis. The proportion of equity capital depends on the possessing and additional funds will be raised. The choice of the source of funds the company has are the issue of shares and debentures, loans to be taken from banks and financial institutions and public deposits to be drawn in form of bonds. The choice will depend on relative merits and demerits of each source and period of financing. The management of the investment funds is key in allocating that the funds are going in the correct place. The profits that are made can be down in two ways dividend declaration which includes identifying the rate of dividends and retained profits in which the volume has to be decided which will depend upon expansion and diversification of the company. The management of cash is another important function. Cash is needed for all different aspects of the company such as payment of salaries, overhead and bills. All of these are important in a company and how successful the financial aspect is going to be.The financial management practices include capital structure decision, investment appraisal techniques, dividend policy, working capital management and financial performance assessment. A company needs to have well financial in order to be successful. “A company that sells well but has poor financial management can fail.” (Johnston)

The company owns two plants in Europe, one being Merseyside Works, England and Rotterdam Facility, Holland. Both plants were built in 1967 and are identical in scale and design. James Fawn, the Vice President and Manager of Intermediate Chemicals Group, is in charge of both plants.

Andrea Winfield considered issuing bonds was not a good option for financing the acquisition. She was particularly concerned about the increasing long-term debt and annual cash layout of $ 6.25 million for 15 years. We believe that her concerns are justified, because the Company had already significant amount of debt that could result in higher risks and stock price

Currently Atlantic’s existing Ohio linerboard mill produces 780 tons per day of linerboard, which represents a mere 1.8% of the nation’s linerboard capacity. This is far below the 150,000 tons of linerboard that Atlantic purchases every year from its competitors. Consequently, with such a tight market, linerboard could either become unavailable or available at very expensive prices. If Atlantic pursues their acquisition strategy in purchasing the linerboard mills from Royal, this could help greatly in strengthening Atlantic’s linerboard capacity and ensure to retain their box plants profits. With Royal’s current Monticello mill producing kraft paper and linerboard, this would require $140.8 million to convert all of the mill’s kraft capacity to

As we know, Atlantic Corporation was considered as one of the nation’s largest forest products producer, its operations in the linerboard industry have not been strong. Hence, if Atlantic purchased Royal’s Monticello mill, it would increase its profit margin greatly. Additionally, it was expected that 1984 would be a healthy year for this industry, the chances got higher again that Atlantic could position well in the overall industry.

Grappling with the potential purchase of Olive Hill Farm, we decided to conduct a financial analysis to determine whether the project should be taken or not. Our financial analysis include scenarios for the best, worse, and most likely outcomes of purchasing the farm. For each scenario a Net Present Worth (NPW) and an Internal Rate of Return (IRR) was calculated and compared. This revealed that there was little gain for the worst case scenario and large gains for the other two scenarios. A sensitivity analysis and a break-even analysis was also conducted. The sensitivity analysis identified the most influential factors on the NPW. In the end, the analysis favored buying Olive Hill Farm because it would be a low risk, high reward investment.

The main problem is with Woodson Chemical Company is the lack of management and communication across all divisions within the organization creating bottlenecks