William Wrigley Jr. Company is exploring whether it is optimal to recapitalise with taking on $3 billion of debt. Three options are revised; borrow and repurchase shares, dividend payouts or continue to function with full equity. Debt will provide a tax shield of $1.2 billion given the tax rate is 40%, this should increase the market share price to $61.53 per share. The viable method for the company is to utilize this debt to repurchase shares. The will not only increase Wrigley’s market value, via the debt shield, but also signal to market that management believes Wrigley’s is undervalued, something the dividend payment won’t achieve.
Everyone remembers going around as a child for one night of the year dressed up as his or her favorite ghoul or storybook character and returning home with a sack full of delicious candies. There were always a variety of candy types, but most of these candies were usually made by two of the major companies in the industry. The Hershey Company and the Tootsie Roll Company were both well represented on this night. Both companies made so many different types of candies for young children to enjoy that the names would forever be imbedded in their minds. These treats were not just for the children, but for the children in all the adults as well. Taste and memories alone are not good enough for the companies to have had as long a tradition as
The Corporate Finance course has helped me, as a student, gain intelligence to make informed decisions upon analyzing the details for Sunflower Nutraceuticals (SNC). These decisions will influence the company’s overall growth annually. In addition to various details of the SNC Company I have also made various decisions in each of the phases of SNC’s simulation which has an estimated values to figure out the results. This paper also explains how SNC’s decisions are influenced with regards to the working capital followed with the final step of evaluating the general affects associated with the limited
The liquidity, profitability, and solvency ratios reveal some interesting points about Kudler Fine Food’s financial position. The liquidity ratios revealed that during 2002 and 2003, Kudler was having no trouble paying short-term debt. However, the current and acid-test (quick) ratios showed that during 2003 Kudler had an excess amount of cash that they were not investing properly. These ratios also showed that Kudler was collecting receivables and selling average inventory very quickly. The profitability ratios revealed that during 2002 and 2003, Kudler was using assets efficiently and making a decent profit. The profit margin ratio
What kid doesn 't like chocolate? Thanks to the iconic Milton Hershey brand, we now have sweets such as Hershey kisses, Reese 's cups, Kit-Kats, and so many more! This essay will discuss Milton Hershey’s life, contributions to society, his companies, and some facts that might not be well known about him and his company.
The Hershey Company is the leading North American manufacturer of quality chocolate, non-chocolate confectionery, and chocolate-related grocery products. The company is also a leader in the gum and mint manufacturer category as well. In this paper, I will discuss the history of the Hershey Company and the impact it has on the United States and the rest of the world.
Hershey’s ratios indicate that the Company’s ability to earn income is increasing across the periods analyzed. Increasing profit margins and gross profit rates indicate that the Company is managing its costs effectively. Increasing return on assets indicates that the Company has been effectively using its assets to generate earning power. The Hershey Company appears to be profitable and is effectively managing costs and resources to generate increased income and provide greater return to its investors, demonstrated by increases in return on equity and earnings per share.
e) Maintenance contracts - Maintenance costs should be included as incremental cash flows because they could change the NPV of the project if the maintenance costs are significantly different for each of the different projects.
Debt to total assets ratio measures the percentage of assets financed by creditors (not stockholders). Debt finance is more risky than equity finance because they must be paid whether a company is doing well or not. Tootsie Roll has a 28% debt to total assets ratio while Hershey’s is 71% indicating that Hershey is taking a higher risk.
The company’s debt ratios are 54.5% in 1988, 58.69% in 1989, 62.7% in 1990, and 67.37% in 1991. What this means is that the company is increasing its financial risk by taking on more leverage. The company has been taking an extensive amount of purchasing over the past couple of years, which could be the reason as to why net income has not grown much beyond several thousands of dollars. One could argue that the company is trying to expand its inventory to help accumulate future sales. But another problem is that the company’s
To facilitate the valuation aspect of the analysis, free-cash-flow forecasts are provided in case Exhibit 10 for Hershey as a stand-alone entity. Most students should find it easy to calculate a value for Hershey using the discounted-cash-flow (DCF) method and industry-comparable multiples, which also are provided. As with any valuation case, students must make judgments about the appropriate capital structure, the weighted average cost of capital (WACC), sales growth, and the terminal growth rate. Once students have explored the value drivers for Hershey though sensitivity analysis, they may then evaluate the bids from both Nestlé S.A.–Cadbury Schweppes PLC (NCS) and the Wm. Wrigley Jr. Company. They will want to examine whether the bids are fair from the perspective of HFC shareholders and whether the synergies assumed by the bidders in their offer prices are reasonable.
The industry that I chose is the chocolate industry. Growing up in Pennsylvania the Hershey Company is well know throughout the state and is a factory I have visited on multiple occasions. While the chocolate tycoon has made some negative headlines over the past few years with outsourcing and layoffs, they have done a good share of philanthropy work for the state and the Dauphin County area.
We believe that diversification of an investment portfolio alone is not a valid reason to sell Hershey Foods Corporation in this case. Ten years ago, there would have been few benefits for the Hershey School with the sale of the Hershey Foods Corporation stock. These benefits include a price advantage on the sale of the stock and a short-term monetary gain for the endowment fund. Another benefit is that the Hershey Trust Company’s investment portfolio would be less concentrated in Hershey stock, which in theory may be to their advantage if the Hershey stock were to suddenly decline in value.
The Hershey Company, known until April 2005 as the Hershey Foods Corporation and commonly called Hershey 's, is the largest chocolate manufacturer in North America. Its headquarters are in Hershey, Pennsylvania, which is also home to Hershey 's Chocolate World. It was founded by Milton S. Hershey in 1894 as the Hershey Chocolate Company, a subsidiary of his Lancaster Caramel Company. Hershey 's products are sold in about sixty countries worldwide. In addition, Hershey is a member of the World Cocoa Foundation. The company has been topped to 384, compared with the previous rank 404, in 2013 (CNN, 2013). This paper is going to show the company’s international environment,
Enterprise recourse planning (ERP) is a business software that is a suite of applications intended to organize the business processes starting with planning to the point of shipping and payment. ERP operates in real time providing a shared database that supports the business process. It follows a consistent manner of tracking all aspects of the business across all functions and departments. offering so many levels for different management needs because it has the ability to customize the information as needed. This implementation paper will focus on HERSHEY FOODS CORPORATION by investigating and highlighting the reasons behind the catastrophe that Hershey foods corporation faced when implemented the ERP.