Hill Country

638 WordsMar 15, 20153 Pages
Hill Country Snack Food Co is experiencing steady growth and success due to its effective operations and quality products in its industry. It has unique capital structure with zero debt and large cash balance corresponding to its conservative operation strategy and corporate culture and philosophy. Whether to change to a more aggressive capital strategy and what is the optimal level of debt-to-capital ratio for Hill Country is the key issue in this case. * Hill Country’s operation strategy and its corporate culture The company commits to operating and cost efficiency with high quality products and strong distribution management. This strategy enjoys a steady sales growth rate and positive profits. The management of Hill Country…show more content…
Given Hill Country’s conservative strategy, a change to a more aggressive capital structure with no more than 20% debt-to-capital ratio is recommended, which will lead to an increasing ROE and higher company
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