Scott Equipment Organization Paper

MCI is the second-largest long-distance provider in the telecom industry of United States after AT&T. First of all, in this case we estimate external financing MCI requires until the end of 1987. Exhibit 9A provides the projected capital investment needs for the following year, so our group plug those data in Exhibit 3 corresponds to Funds from Operations and Use of Funds, then come up with the External Financing MCI needs from 1984 to 1987 by deducting the total Source from the total Use. By looking at each year’s needs, we noticed that the external

The book Equipping 101 by John C. Maxwell is a book about equipping people to become leaders. Not only does it state numerous ways in which to equip people, but it also teaches how to recognize potential leaders. The goal of the book is to equip people to become leaders that will also equip other people to become leaders, a passing on of the torch type of scenario, so to speak.

The company position is strong enough so its better that company should use debt financing instead of equity financing.

This proposal accounts for the new debt and equity mix of Star Appliances by estimating the company’s cost of equity. The methods used include the dividend discount model, the earnings/price model, and the CAPM model. After analyzing all three possibilities, it is apparent that the CAPM model provides the most accurate estimate of Star Company’s cost of capital because it accounts for the beta. Using the CAPM model, the new Star Company cost of equity is calculated as 9.4% and the WACC is determined to be 9.14% at the 9.5% debt rate.

Improve inventory days. This is part of Horniman’s business; it is unclear whether the inventory can be improved, particularly if they are moving to more-mature plants. The analysis to make this trade-off is similar to that of the payables policy. One would divide the expected margin gain by the increase in inventory levels to compute a marginal return on capital. One additional level of concern is the substantial additional risk associated with increasing inventory when facing uncertainty with respect to the effects of interest rates and adverse weather.

Based on our projections for the years 2002-2004, the biggest driver that effects debt is the company’s operating expenses. Based on the history of the upward trend of operating expenses, our recommendation is that The Body Shop needs to concentrate on lowering the operating expenses, and keeping those expenses around 45% or lower in order to avoid borrowing money. Our 45% recommendation includes a safety net which will prevent having The Body Shop borrowing cash if sale do not continue to climb at a significant rate.

Du Pont's financial policy had always been based on maximization of financial flexibility. Taking to consideration the riskiness of Du Pont's businesses, its competitive position and profitability had declined in the last 20 years. Moreover, the firm is still forced to seek external financing each year for the next five years (1983-1987) due to the continued high level of capital expenditures which are considered non-deferrable to redress the causes of poor performance. In view of the importance and magnitude of the projected financing needs, the firm is concerned about how the cost and availability of debt

Equipment are goods that are bought or used primarily for business, whereas inventory are goods held for immediate or ultimate sale. If the goods purchased by the defendant are equipment, the plaintiff still possess those goods since it was part of the collateral he had, when it was sold to Maloney. On the other hand, if the goods purchased by the defendant were inventory, then the security rights the plaintiff had with those goods will expire by the time the goods were sold to a third party. I think according to the definition of the article, it is fair that the distinction between inventory and equipment plays a major role of whether the plaintiff still had security right over those goods.

Rajat Singh, a managing director at Hudson Bancorp, needs to find a way to rejuvenate the paper check corporation. One main part that needs to be calculated is the appropriate mixture of debt and equity for the firm. The company needs to determine the correct mixture so that they can both minimize the cost of capital and increase the shareholders value. I will analyze the current and future situation of the company, trying to find the correct credit rating to use that will increase income. With the new credit rating, I will be able to recommend a certain amount of debt for the company to take on and be profitable.

Butler Lumber Company, a growing profitable business has exhausted its credit limit and the key issues facing it are: 1. Need for additional funds to continue the growth 2. Need to consolidate debt 3. Need to improve cash flexibility.

In July 2002, an investment banker advising Deluxe Corporation must prepare recommendations for the company’s board of directors regarding the firm’s financial policy. Some special considerations are the mix of debt and equity, maintenance of financial flexibility, and the preservation of an investment-grade bond rating. Complicating the assessment are low growth and technological obsolescence in the firm’s core business. The purpose is to recommend an appropriate financial policy for the firm and, in support of that recommendation, to show the impact on the firm’s cost of capital, financial flexibility (i.e., unused debt capacity), bond rating, and other considerations.

As Mr. Laporte approaches retirement, American Home Products (AHP) has an important decision to make with respect to adopting a more aggressive capital structure policy. Use of debt carries with it advantages and disadvantages. In accordance with value-based management, we recommend that AHP adopts a capital structure consisting of 70% debt. The following points justify such action:

The company is hoping to make a decision that can improve the efficiency of its operation with sound a strategy to reduce costs as well as increase performance. They must manage the inputs with the outputs to achieve the appropriate competitive priorities of the firm’s enterprise processes. With their borrowing ability reduced due to manufacturers offering no credit and retailers demanding payment within the same cycle of 30 – 60 days, Brunswick is placed in a position of exhausting their borrowing ability and another loan would be difficult to obtain, a solution would be to consolidate their debts, engage discussions with a financial institution that would willing to buy the debt from the original loaner and willing to apply less interest rate thus raising the loan limit so the company can borrow more.

In November 2003, Maria Ober, a vice president of Deutsche Bank Securities, received a client request for financing the acquisition of a large hospital-supply distributor. The client needed to present the seller with an offering price and an indication of financial commitment within two weeks. The contemplated transaction entailed a highly-leveraged acquisition of the target. The tasks for the student are to value the target firm and projected synergies, assess the credit worthiness of the target (i.e., its ability to bear the high debt), and critically evaluate the general design of the transaction.

U.S. Semiconductor, a semiconductor manufacturer decided to expand their business to UK market in 1980. Their new business plan needed specialized technical support facility in UK. In order to minimize the equity investment, they decided to fund their assets mostly with debt. As Semiconductor owned subsidiaries, which spread all over the world, they face great exchange risk. Besides, instead of building a production department in UK, Semiconductor kept producing their products domestically and delivered them to UK by plane. British firms also confronted exchange risk due to the difference between import costs and sales revenues. This case mainly involves the discussion on the method of debt funding.