Eastboro Machine Tools

1390 Words Apr 6th, 2010 6 Pages
Deutsche Brauerie

A director of small German brewery must prepare to vote on three issues: 1. approval of financial plan for 1993, 2. quarterly dividend declaration, 3. incentive compensation plan.

1. What accounts for Deutsche’s rapid growth in recent years? What policy choices account for this success?

2. What is Deutsche’s credit policy toward its distributors in Ukraine? Why is it different from the policy toward its other distributors? Is the company’s credit policy appropriate? Is it profitable? If not, how to change it?

3. Why does this firm need increasing amounts of bank debt?

4. As a member of BoD, how would you vote on: o The proposed raise for Oleg Pinchuk o The quarterly dividend declaration of €698,000.
o
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Spreadsheet file: None

Polaroid

1. What are the main objectives of the debt policy that Ralph Norwood must recommend to Polaroid.s board of directors?

2. What financing requirements do you foresee for the firm in the coming years? What are the risks associated with Polaroid.s business and strategy? In your view, what firms are Polaroid.s peer firms?

3. Drawing on the financial ratios in case Exhibit 9, how much debt could Polaroid borrow at each rating level? What EBIT coverage ratios would result from the borrowings implied by each rating category?

4. Using Hudson Guaranty.s estimates of the costs of debt and equity in case Exhibit 11, which rating category has the lowest overall cost of funds? Do you agree with Hudson Guaranty_s view that equity investors are indifferent to the increases in financial risk across the investment grade debt categories?

5. Is Polaroid.s current maturity structure of debt appropriate? Why or why not?

6. What should Ralph Norwood recommend regarding:
• the target bond rating;
• the level of flexibility or reserves
• the mix of debt and equity;
• the maturity structure of debt;

7. and any other issues you believe should be brought to the attention of the CEO and board?

Corning Inc. Zero Coupon

1. Why do you suppose Corning is issuing convertible bonds and concurrently offering common stock? Prepare to contrast the advantages of convertible bonds versus straight debt and common

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