Blaine Kitchenware, founded in , produces small appliances. Claims just under 10% of the $ billion US small appliance market. BLAINE KITCHENWARE Case Exhibit 1 Operating Results: Revenue , , , Less: Cost of Goods Sold , , The main fix in the case is whether Blaine Kitchenware’s should opt for repurchasing its own shares or not. If Blaine’s Kitchenware repurchases its shares, they.
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Net worth in According to their current situation we do not think their current capital structure and payout policies are appropriate.
Another scenario is to completely buy-back the market float. There are UK writers just like me on hand, waiting to help you. Acquirers could pay way less than they originally expect to buy out the firm.
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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 kitchnware to have a levered capital structure instead of having a baline unlevered one as it would have affected the cost of capital of the company.
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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. Register Submit to us Case writing resources Case writing scholarships How to submit your case Online kitchdnware submission Why submit your case to us?
Blaine Kitchenware, Inc: Capital Structure | The Case Centre, for educators
The Case Centre is dedicated to advancing the case method worldwide, sharing knowledge, wisdom and experience to kitcenware and transform business education across the globe. As a non family member, the stock repurchase will make me more skeptical because the shares owned by the family is rising exponentially and hence making it more dominant.
How would such a buyback affect Blaine? The Case Centre is a not-for-profit company limited by guarantee, registered in England No and entered in the Register of Charities No Other Income expense 13, 13, Less: Although investors take dividend as an indicator for a company to succeed, they also expect dividend will be paid continuously at either stable or growing rate.
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Would you be in favor of it as a non-family shareholder? View our pricing guide or login to see prices. Go to advanced search.
Blaine Kitchenware Inc Exhibits Stephanie Zepeda | Stephanie Zepeda –
Registered Data Controller No: Finance, Accounting and Control. Since Blaine Kitchenware is a public company with large portion of its shares held by their family members, they have a financial surplus, which decreases the efficiency of its leverage. There is a big question facing Blaine and that is why would their existing shareholders want to sell their equity back to the company?
Using a perfect leverage is always beneficial for a company as it allows to decrease the cost of capital. Attention is also given to the value of interest tax shields.
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It is evident that the cost of capital has reduced when the company decided to go for share repurchase using the surplus cash and debenture issue.
This is not a very healthy situation for a public company as the interest of the minority shareholders are sometimes not taken care of. Following is the operating results for the year when the capital structure is levered and unlevered. Our work is high quality, plagiarism-free and delivered on time.
Dividend payout ratio 0.
Tax ID No Order a custom essay Print this dolution Search again Word count: We are completely closed on Tuesday 1st January. Teaching note supplement software. About this resource This Business essay was submitted to us by a student in order to help you with your studies.
The management should use the available cash and invest in attractive investments.