Case Questions for TRX Inc., IPO
! What attributes make a company a good candidate for an IPO?
Good business history:
Investors will expect the long-term sustainability through historical financial data.
Therefore, the good business history can reach investors’ expectation.
Profitability:
A profitable company can indicate investors that the company can get a positive ROI.
The positive ROI can not only suggest potential growth but also lead to dividends for investors. Visibility and recognition:
Visibility enables investors’ better understanding of the business model and increases the recognition.
Growth potential:
In the growing industry, the company has the higher potential to grow in the future.
Solid and
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The IPO would offer liquidity and a good way for current minority shareholders to quit, which finally lead to a better alignment of its stakeholders
! Estimate a preliminary range for TRX's shares.
The following are the estimation of preliminary range for TRX’s
P/E Ratio Model Calculation
CSFB
Management Plan
Research
Net Income (2005 E)
Average shares outstanding
Earning per share
Industry P/E ratio (2005 E)
Price
Discount rate
Price for IPO
-3.100
12.462
-0.249
21.480
-5.343
15%
-4.646
-4.500
12.462
-0.361
21.480
-7.756
15%
-6.745
EV/EBITDA Model Calculation
Management
CSFB
Plan
Research
EBITDA (2005 E)
Industry EV/EBITDA
(2005E)
EV
Cash and cash equivalents
Long-term Debt (2004)
EV+ Cash - Debt
Average shares outstanding
Price
Discount rate
Price for IPO
10.974
10.574
11.833
129.855
10.595
3.607
136.843
12.462
10.981
15%
9.549
11.833
125.122
10.595
3.607
132.110
12.462
10.601
15%
9.218
! Given the situation Davis faced in 2005, what would you recommend that he do with respect to the offering?
Although the offer price was lower than expected, Davis should stick to implement the IPO for the following reasons. First, IPO would bring capitals to the company and
better support the future growth. With strong ability of generating cash flow and aggressive working capital management, the company would achieve great growth and get positive EBITDA in 2006, which would stimulate the stock price to go up and increase the company’s valuation. Moreover, IPO would
Do you think that either firm can attain a sustainable competitive advantage in this business?
The Molex Corporation is an electronic connector manufacturing firm, which is based in Illinois. This company is facing a financial reporting problem in which the financial statements were overstated. Joe King ,the CEO of the company, was appointed in July of 2001, and was responsible for managing and inventory control, among other very important duties. Diane Bullock was hired in 2003, to replace the previous CFO. Both Bullock and King were being accused of what? by the external auditors, Deloitte & Touche, for not disclosing an 8 million pre-tax inventory valuation error.
* Assuming Dell’s sales will grow at 50% in 1997, how would you recommend that the Company funds this growth? How much capital would need to be reduced and/or profit margin increased if the company were to fund its growth by relying only on internal sources of capital? What steps would you recommend the company take?
On the other hand, the company’s products would be more seen by consumers, which means the demand for their products probably increase.
We performed a retrospective chart review of clinical data already collected in the process of treatment of pediatric patients at our institution. Records of patients between the ages of 0-18 years who received RTX infusions for a diagnosis of steroid dependent or steroid resistant nephrotic syndrome or glomerulonephritis between August 1, 2009 and December 31, 2012 were reviewed.
Over the weekend I went through the ATI book for Fundamentals of Nursing read the infection control and hygiene sections. I tested myself with questions and I did pretty well. I need 50 NCLEX questions on Saturday for about an hour and a half. It was a fifty and fifty for me, but I needed to read the questions more carefully when answering. The “select all that apply” questions always get to me and it is something I am still improving on. I finally was able to arrange my studying time into my schedule. I am preparing myself for the next class meeting. NCLEX has been beneficial to me during my study time.
Assume that you are a CEO of a medium-sized company that needs a significant influx of cash for several expansion projects. As the CEO, you must determine whether your company should remain private or go public. Some companies postpone going public due to the unpredictability of economic and market conditions. Consider the ramifications of both alternatives. Construct an argument for and against going public. Before providing your response, review the guidelines and regulations associated with going public by visiting Small Business and the SEC located at http://www.sec.gov/info/smallbus/qasbsec.htm.
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 Assets (ROA) of 8.74% and Return on Equity (ROE) of 12.4% are both positive.
We defined several criteria to determine our choice – return, risks and other quantitative and qualitative factors. Targeting a debt ratio of 40% will maximize the firm’s value. A higher earning’s per share and dividends per share will lead to a higher stock price in the future. Due to leveraging, return on equity is higher because debt is the major
6. Which of the two companies do you think has better long- terms prospects for success in India?
computer hardware sector. The company has a high brand value in the market due to its cost
A high dividend payout policy reduces the rate of growth in earnings, g = br. For any rate of return on investment (r), the larger the payout ratio (the smaller the value of b), the slower the rate of growth. Lumber firms in general (Georgia Atlantic is an exception) have approximately a 35 percent payout ratio. Since the other companies have, on average, been growing at a rate of about 7 percent annually over the last twenty years, versus an average growth rate of 2.47 percent for Georgia Atlantic, it is clear that Georgia Atlantic's ROE on investment is substantially below the industry average.
Answer: Both Companies are acting on a high-tech market. The development and progress in this market is really fast.