Investment Essay on Breadtalk

Sprouts sells around 50% of perishable products and 50% of non-perishable products. If possible, they try to offer local products first and if they are not able to obtain those then they widen their scope. Sprouts operates solely in the United States of America. As of February 26, 2015, they have a total of 198 grocery stores in 12 states and have become one of the most important specialty retailers of fresh, natural and organic food in the United States.

Statement of Purpose: The purpose of this analysis is to determine if Reynolds Metals (“Reynolds”) should accept Nestlé’s offer of $61 million for its holdings of Eskimo Pie. The crux of the issue is whether or not the projected income from a proposed Initial Public Offering (“IPO”) by Wheat First Securities (“Wheat First”) is reasonable and will actually result in proceeds between $61 and $68 million to Reynolds, the Reynolds family and the Reynolds foundation, as projected. To get at this question, this paper will seek to value Eskimo Pie as a stand-alone company, if the IPO option is selected.

In determining the investment value of Cracker Barrel, a peer group comparative analysis was completed. Biglari’s comparison of Cracker Barrel to the S&P 500 restaurant index is inaccurate and misleading. The following criteria was used in developing a more accurate peer group for Cracker Barrel:

1. Decompose IBM’s ROE (by quarter) and discuss the factors (and trends) that contribute to

Our approach is an active security selection with passive asset allocation. We invest heavily in common stocks, but vary our holdings to include companies of all sizes and industry groups. We seek to achieve sufficient diversification by abstaining from investing more than 5% of the total assets in a single security unless it has significant upside potential, and we make an exception for ETFs and index funds as they represent a basket of securities. Our main goal is to identify and invest in common stocks with high potential for both short- and long-term capital appreciation. Our secondary goal is to invest in common stocks with steady income. When potential for rewards are high, we also enter into derivative

2． Wal-Mart’s average ROE for the 1997 fiscal year was 19.7% [$3,525/($18,503+$17,143)/2] while Sears’ average ROE over roughly the same period was 22.0% [$1,188/($5,862+$4,945)/2]. Don Edwards was puzzled by these numbers because of Wal-Mart’s reputation as a premier retailer and Sears’ financial difficulties not long ago. Use the 3-step DuPont method to break down the ROE calculation and determine what is driving the individual performance of each of these two companies during

When combining the figures for ROE, ROA and the DuPont analysis it appears that the company is using leverage favourably. ROE is greater than ROA and assets are greater than equity. This is a positive sign for shareholders as it suggests a good investment return in a company that is managing its shareholder equity well (Evans & McDowell, 2009).

Return on Total Assets was 4.43% which is below five percent. That indicates that the company is not accurately converting its assets into profit. The total for Return on Stockholders’ Equity was 8.89%, however financial analysts prefer ROE to range between 15-20 %. The company’s low ROE indicates that the company is not generating profit with new investments. Lastly, Debt-to-Equity ratio for the company was 1.01 which indicates that investors and creditors are equally sharing assets. In the view of creditors, they see a high ratio as a risk factor because it can indicate that investors are not investing due to the company’s overall performance. The totals of these three ratios demonstrate that the company’s financial state is not as healthy as it should be.

Introducing a new product to the market is a very risky operation. Not only is it risky but it takes time, effort and money. In order for a product to be successful, it had to fully undergo the product life cycle. Kellogg’s has an advantage when it comes to the breakfast market as it holds the biggest market share. After providing the British public with breakfast for years, it most certainly has a larger customer loyalty base. The strong brand makes it easy for product launching as the public are already familiar with the brand. However, introducing a new product comes with its challenges and risks. Looking at the ratios, Kellogg’s has a current ratio to date of 1:1.1 . This in financial terms rings alarm bells as it shows that the company will struggle to pay its short term obligations. Kellogg’s however can operate on a low current test ratio as it has a good long term revenues coming into the business. This means that it is possible to borrow on this basis to meet its current obligation. After calculating the net present value, which gave a positive NPV of £38450million, I move that we go ahead with the introduction of a new product. In traducing a new product is a sign of innovation and growth on the part of the competitors. In order for a new product to be introduced to the market, Kellogg’s will have to spend money on the actual product, the marketing side of

As a result of SKM’s efforts, John Fruehwirth, a principal at Allied Capital, was considering an injection of $20 million worth of mezzanine debt/growth capital in E-bar. Fruehwirth was aware of the fact that a restaurant with significant growth opportunity like E-bar could either be the next Cheesecake Factory, or flop and take the debt injection along with it. E-bar has shown initial success in California, but Allied’s investment committee needed to evaluate if this continued success can be applied outside the state. Areas of main concern included if the E-bar concept was sufficiently strong to visit and be a nationwide brand or if it had been merely a “California concept.” And in the case of success, would Allied Capital be able to meet is underwriting standards? Based upon the Black-Scholes formula and the financial information provided in this case, it is recommended that a current stock price of $6.18 be used and the warrant agreement be increased to 3.9% of total shares outstanding to yield an IRR of 18%. This report will support and examine E-bar’s ability in generating the required return on invested capital from Allied Capital and conclude by providing a recommendation on the deal alterations based on Allied Capital’s needs. The next section examines AC’s due diligence on E-bar’s growth potentials and the industry it operates in.

Next is Asset turnover with .55 times which is a measure of the efficiency of asset utilization. Finally the equity multiplier with 2.26 which is a measure of financial leverage of the firm. When compared to the traditional ratios we get similar results; Profit margin 25.44% (27% DuPont) versus 18.75% industry average. Asset turnover is .54 (.55 DuPont) versus .50 industry average. Equity multiplier 2.28 times (2.26 times DuPont) versus 2 times industry average. The results show that the DuPont analysis using ROE as the main determinant are very similar to the regular ratios. Furthermore the ROE of the traditional ratio is 31.32% with DuPont being 33.10% versus the industry average of 18.75% shows that the firms ROE is very robust. While the firm has some challenges with respect to liquidity and inventory management, as well as debt management it still is doing a good job with respect to its shareholders. However it could be doing a little better for the stockholders, and needs to address some of the above issues mentioned.

In this paper, an analysis of Amazon’s financial position for the year ending 2015 has been conducted. Amazon’s Pro Forma financial statements for the 2016 and 2017 were generated so as to assess the future financial position of the company. When you look at the breakdown of the analysis of financial ratios, the Return on Equity (ROE) using the DuPont method of analysis and the

Profitability ratios are basically figures to measure if the company is doing well in the terms of profit[13]. ROCE ratio has increased in 2011 but in 2012 it deteriorates by 3%. This fall indicates that company was not successfully getting high returns as a percentage of its resources available, compared to 2011.

These are strike years so we will ignore them. In 1994, ROE is less than that of last three years. Overall its not good sign, but its explanation will be given in upcoming ratios.

Founded in 2000, BreadTalk Pte Ltd was first conceptualised when its founders saw an opportunity for starting a bakery selling baked breads and buns that were fresh, visually creative and attractive. Since its inception, BreadTalk has expanded its business to more than 600 outlets across 16 countries in Asia and Middle East and has plans to continue its growth trajectory. Besides being known as an internationally successful local brand, BreadTalk has also won numerous awards over the years and is the first Singaporean company to be named “Growth Market Retailer of the Year” at the World Retail Awards. The company was also recently used as an example by Finance Minister Tharman Shanmugaratnam to illustrate how Singapore's homegrown businesses have made their mark globally.