Blaine Kitchenware Case Study Answers 1. ABOUT THE COMPANY Blain Kitchenware, Inc. (BKI), founded in , is a mid-sized producer of. View Notes – Blaine Kitchenware Case from FIN at DePaul University. Blaine Kitchenware Questions: 1) Do you believe that Blaines current capital structure. ABOUT THE COMPANY. Blain Kitchenware, Inc. (BKI), founded in , is a mid- sized producer of small appliances for residential kitchens. BKI has an.
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Another scenario is to completely buy-back the market float. Any orders bblaine during this time will be dealt with when we open again on 2nd January.
Each of us is qualified to a high level in our area of expertise, and we can write you a fully researched, fully referenced complete original answer to your essay question. Product details Share this page: Buyback of the shares using the surplus cash and issuing debentures is beneficial for the company as it will give some degree of leverage to the company.
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It is a form of returning the money back to shareholders and the shareholders who are out there for investment purposes feel it a better option to stay their money invested in a growing company instead of receiving petty dividends. Order a custom essay Print this page Search again Word count: Seeing the industry debt equity ratio, the company has kept itself unlevered and this was a bit costly as the cost of debenture is fast cheaper if we compare it with the cost of equity.
The justification can be drawn from the diminishing returns for the last three years.
The company has been earning profit and it should seek and endeavor further growth opportunities instead of returning it back to shareholders. Cost of capital when the company is unlevered Ke They should also consider things such their acquisition plans, their earnings per share and their dividend per share, ownership structure, capital structure and of course the reputation of the company in the market after the buyback.
Using a perfect leverage is always beneficial for a company as it allows to decrease the cost of capital. Net worth in They also have to consider of the effect of the repurchase on various factors like the risks involved in raising a debt especially when they are large, very conservative and debt free. Cost of capital when the company is unlevered Dividend per share D1 0. This is not a very healthy situation for a public company as the interest of the minority shareholders are sometimes not taken care of.
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The Case Centre is a not-for-profit company limited by guarantee, registered in England No and entered kicthenware the Register of Charities No The return on equity will atudy which will aid the family in better realizing value for their stake. However, the company must guard itself from getting over-levered. A surplus of cash lowers the return on equity and increases the cost of capital; also large amount of cash may offer incentives to acquirer to and also decrease the enterprise value of Blaine.
Blaine has an unlevered capital structure currently i. This page has approximately words.
Blaine Kitchenware, Inc: Capital Structure | The Case Centre, for educators
Just complete our simple order form and you could have your customised Business kitcheware in your email box, in as little as 3 hours. My account Kitchnware to The Case Centre? Following is the operating results for the year when the capital structure is levered and unlevered. There is a big question facing Blaine and that is why would their existing shareholders want to sell their equity back to the company? This shows that the company has been keen on less retention of money to further invest.
In summary, in order for Blaine to keep its current payout policies, they must reduce numbers of outstanding shares throughout share repurchasing. In other words, Blaine does not fully utilize its funds. All fields Reference no.
Debt being a cheap source of finance and given the industry standards confirming the availability of the debt as well as the conformity by the rivals in subscribing to the debt capital, it seems wise to have a levered capital structure instead of having a completely unlevered one as it would have affected the cost of capital of the company.
What are the primary advantages and disadvantages of such a move? About this resource This Business essay was submitted to us by a student in order to help you with your studies.
However, concluding whether an unlevered or a levered capital structure is appropriate for a company largely depends on the industry debt equity ratio i. Go to advanced search. Other Income expense 13, 13, Less: The company has been earning less profits and hence it is of the opinion of distributing the profits to shareholders instead of retaining it for further investments.
Their management will have increased stakes, this will reduce their chance of being acquired and this will provide more dividends to their remaining shareholders.
Blaine Kitchenware Inc Exhibits Stephanie Zepeda | Stephanie Zepeda –
Since they are totally equity financed, there is no tax shield. Access this item You must be logged in to access preview copies.
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