Blaine Kitchware Essay

Using the assumptions given in the case, all elements of income statement and balance sheet can be projected for next three years 2010, 2011 and 2012. Sales cycle of the products of the company is such that sales of a particular product increases initially for few years and then starts to decline as the new technology

Management considering share repurchase program should weigh its benefit of financial discipline, efficient corporate strategy implementation and utilization of tax shield against the downside of cost of financial distress. It’s not the possibility of bankruptcy that causes concerns among equity holders regarding extent of leverage but the direct costs (legal, liquidation, administrative etc.) and indirect costs (deteriorated corporate image, management time and attention, agency costs of value-destructing investment, distress asset sales etc.). Exhibit 4 lists the key assumption inputs of approximating quantitative firm value/ equity value accretion. Levering UST to a larger extent by adding $1,000m does increase firm value.

Introduction: Throughout the book of Into The Wild Chris McCandless is known to be a wacko reckless idiot, and is also known to be courageous and heroic. However does a courageous person go out into the wilderness knowing that the outcome will be fatal? People viewed him from different perspectives and also have broad range of opinions of this young man. Some deemed him to be incredibly dim-witted or a man that simply just followed his heart. Evidence shows that Chris McCandless is actually a mix of both. The first opinion that described McCandless was brainless, idiotic, and extremely foolish. Many passages from Into The Wild can support this outlook.

     David Berkowitz was one of the most feared killers in New York City in the 1970's. His crimes caused the death of six people, and the injuries to seven others. His crimes became legendary because of the bizarre content in the letters that he wrote to the police and the media and his reasons for committing the attacks. David Berkowitz, better known as Son of Sam, is a man with a troubled childhood and upbringing. From his many “Parental Figures” to believing that dogs were telling him to kill. During his reign of killing the police felt the pressure to catch David. "Operation Omega" was formed, which was comprised of over 200 detectives – all working on finding the Son of Sam before he killed again.

Our estimated cost of capital, 20.81%, is lower than Ricketts’ expected return, 30%-50%, thus the investment is worthy. However, it’s higher than other pessimistic members’ expected return, 10%-15%, making the decision more complex and requiring further valuation。

* If we surmise that the company’s specialist’s predictions of 4% on market growth along with renewing current and or adding more customer contracts then the profits should be as follows:

Aside from the two aforementioned proposals the company can raise its leverage in other ways. By conducting DuPont analysis and understanding operating leverage we see that purchasing fixed assets and decreasing stockholder’s equity will raise the equity multiplier and the firm’s operating leverage. In this instance we recommend against this approach as the firm already has a large amount of excess cash above what they require to fund new positive NPV projects and purchase new assets. Investors would rather see their capital returned to them in the form of share repurchases and dividends as it is evident by the company’s cash stockpile that they can

An analysis of a repurchase of stock for $400 million cash, and recapitalization to 80% debt-to-total capital by borrowing $1.27 million reveals that BBBYs return on equity will be 113%, return on assets 61% and an after tax cost of debt of 28%. ROE is > ROA and ROA > after tax cost of debt. With the 80% debt-to-total capital structure ROE exceeds the other two capital structure scenarios of no debt and 40% debt-to-total capital. While all of this looks great there are other considerations. The household and personal products industries debt to total asset ratio is 34.69% while BBBY debt to total asset ratio is at 44% ($1,270,000/$2,865,023). Increasing to this capital structure would also reduce shareholders earnings per share.

in our calculations, as this company exhibited dramatic value differences to others in the sample, (likely to skew our results and prove misleading). Using the average of the revised sample field for each ratio, we inserted Torrington’s values where appropriate to generate an entity value. The findings generated two values for Torrington, 606 million and 398 million. Taking the average of these two numbers, Torrington exhibited a relative value of 502.41 million. Because of the lack of related information given in the case, and the often large differences in measures amongst competitors, different capital structures, internal management strategies, there remained many unknowns in our model. We decided it would be best to use this valuation to reaffirm our assumptions in our DCF valuation. (Please see exhibits)

1. In the last five years the growth in sales for the company has been around 10% per annum, except for the 1997, the growth was 18.78%. In the case, nothing is mentioned that company has made any drastic changes in its strategy to grow faster. In such a scenario, projected a consistent growth of 20% per annum for the next 5 years is too optimistic.

Pro-forma income statement and key credit rating determinants are shown in Exhibit 2 and 3 respectively. Remaining share no. of 158.3m after repurchase is based on proportional value addition distribution between cash-out and remaining shareholders and this number is inserted to calculate earning per share and corresponding immediate share price change after announcement of repurchase program. According to Exhibit 3 and industrial average of relevant grades, only fund flow/ total debt and total debt/ capital measures are not comparable with A credit rating. Considering EBIT and EBITDA interest coverage are two most important criteria and equity market value is so substantially different from book value which leads to a healthy

The Cost of debt is determined by using the average of YTM of the 4 JetBlue debt instruments provided in Exhibit 4. The exact value is 6.91%, and a CAPM cost of equity is determined to be 10.50% using the risk-free rate, market risk premium and comparable beta from Southwest of 1.10. The cost of capital is determined to be 6.90%. Running the DCF analysis, JetBlue is currently valued at $2.7bn. Distributing equity value over the shares outstanding gives a share price of $66.51. This proposed price of the IPO is highly overpriced, considering that the underwriters have priced it within a range of $22-$24.

This is Blaine, he is a 16 years old boy. He is having a hard time, because he has to make a big decision. He has a girlfriend call Terra, the have known each other for 5 years, and have always been best friends. A 3 month ago the start flirting and they fell in love with each other. Before their relationship developed, they were never angry at each other and did never hurt the other. That change, and got opposite later on. They had argument 3 a week, Jessa got mad at Blaine for small things, like if he forgot to write to her or stuff like that. Blaine really loves this girl but were so tiered, both physically and mentally. He was sad almost every day he went to bed because of her. All he tried to do was to make her happy, and he

3. Refer to the monthly sales forecasts given in the first Table. Assume that these amounts are realized and that the firm’s customers pay exactly as predicted.

After all of this we also need to keep in mind the financing deals that they have made with the Patricorp Group of $312,500 In for 41% of the equity, and $625,000 in subordinate debt. That was the previous debt that I talked about in the previous paragraph. As of the current revenues of the company, and considering the actual payments needed to pay they need to continue to grow the company to keep up and service the debt they will inquire. It is critical that they are successful with the growth, so that they do not fault on their agreement and have to give up more equity in the company so that they can retain ownership.