...Analysis and recommendation on the capital structure of Hill Country Snack Foods Co. EXECUTIVE SUMMARY This report discusses the current operational and financial strategies of Hill Country Snack Foods Co. and analyses the proposed capital structure for it. Part I of the report reviews the company’s strategies and its latest financial performance. Part II illustrates a detailed valuation of the proposed capital structure. Valuation methods involved includes Dividend Discount Model and Discount Cash Flow valuation (the Hamada approach). It is recommended that the company adopt a 40% debt-to-capital structure to fully use its capital and benefit from the external funding. PART I THE OVERVIEW OF HILL COUNTRY SNACK FOODS CO. Background of Hill Country Snack Foods Co. Hill Country Snack Foods Co. is a middle-size snack food company located in Austin, Texas in the U.S.. The snack food industry is very competitive. The main competitors of Hill Country are industry giant PepsiCo and smaller companies like Synder’s-Lance. The current CEO Howard Keener, who is 62 years old and worked in the company for over 15 years, is approaching retirement. He has a very strong personal influence on the company culture and the way it is operated. He is passionate about maximizing shareholder value, believes in keeping tight control over costs, and is very risk adverse in the operation strategy as well as the financing decisions. Considering his near retirement, many investors think there will...
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...DYNASHEARS Memorandum 1. With the limited amount of data, the forecasts shown in case Exhibits 1 and 2 seem fairly reasonable; however, looking at a whole, the pro forma income statement and balance sheet provided by Mr. Sheehan have a few questionable points: a. Net Sales – even though the forecast numbers are based on the typical seasonality of the firm’s sales performance of previous year. The forecast performances are much higher than the actual. b. Profit and retain earnings – closely relate to forecast, these forecast also inaccurate c. Inventory – with sales under perform, the inventory forecasts are also inaccurate. With much higher inventory than anticipated, especially in January 1991, the residual between actual and forecast is 924,000, which is a very big different. These excess inventories became illiquid assets, thus increased the liabilities which have a negative effect on the company’s financial health. Nevertheless, with lack of previous years’ financial data in addition to the unpredictable recession of the economy, it is hard to say whether or not these data were exaggerating. 2. Risk assessment a. Liquidity – as of March 1991, the current and cash ratio of Dynashears are 5.99 and 0.38, which are not bad numbers. The ratios shows that Dynashears’ current assets are still well cover (almost 6 to 1 ratio) over its increasing liabilities due to illiquid assets and that it still has sufficient cash for optimum operation. b. Long-term debt ratio – as of March 1991...
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...1. According to the gross margin ratio calculations (see Exhibit 1-a, 1-b), Bismark Bock is the most profitably beer label followed by Four Heads Stout and finally Buffalo Ale. Buffalo Ale’s low profitability is due to having the lowest selling price and highest production costs. Having a gross profit margin percentage of 19.05% means that Buffalo Ale generates $0.19 of gross profit for every sales dollar. 2. When referencing the gross margin percentages of the three labels under activity based allocation (see Exhibit 2-a, 2-b, 2-c), Buffalo Ale is the most profitable followed by Four Heads Stout and finally Bismark Bock. Bismark Bock has a negative gross margin percentage, which means this product does not make profit. This loss is a result of high production costs per bottle which are not compensated by the current selling price. These results show how profitability evaluation is highly affected by cost allocation methods. For instance, in question 1, Bismark Bock was ranked as the most profitable label when the plant-wide allocation method based on direct labor hours was used. 3. In theory the two different allocation methods should have no effect on the ending net income. This is because sales prices, number of batches produced and total production costs remain unchanged. According to the calculations, the net income is $51 greater when using activity based allocation compared to using plant-wide allocation (see Exhibit 3-a, 3-b), because the rounding issue. But...
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...For many Australians, drinking alcohol is part of their social identity. Despite this, excessive alcohol is seen by many as being the most serious concern for the community, even compared to tobacco and heroin. This summary aims to determine the economic theory underpinning the taxation of alcohol and the impact of taxation on economic efficiency. Overall, on average, per capita consumption of pure alcohol is 10.35 litres per person (ABS, 2012). From 2006 to 2011, alcohol consumption per capita for ages 15 and over in litres increased from 10.31 to 10.57 in 2006-07 and started to decrease from 10.56 to 9.99 in 2007-11 (ABS, 2012). From Figure 1, it can be concluded that Australians are slightly heavy drinkers when compared to other countries with similar cultural, social and economic profiles. AIHW (2011) reports that males and those aged between 18 and 29, and also Indigenous Australians were more likely to consume alcohol in risky quantities. Figure 1: Alcohol consumption litres per capita among population aged 15 and over in 2009 (Source: Adapted from OECD iLibrary, 2012) Costs of alcohol consumption affect labour, health and crime. Collins and Lapsley (2008) report that total tangible costs in Australia attributed to alcohol consumption in 2004-05 were estimated to be $10.8 million. Figure 2 shows that lost production in the workforce contributes a large portion, followed by road accidents, healthcare and crime. According to Grogan (2012), 25 drinkers were arrested...
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...Subject: Butler Lumber Company Problem: Butler Lumber Company has been experiencing in the past few years a rapid growth of its sales. However, in order to sustain this growth the company also experienced an increase of its inventory and of its accounts receivables leading to a shortage of cash to finance day to day activities. The company therefore needs to find a way to improve its financial flexibility without extending even more its trade credit. Options: 1. Remain with its current bank, the Suburban National Bank, with a credit limit of $250,000. 2. Take the 90-day note ($465k) from Northrop National Bank and deteriorate relations with Suburban National Bank. a. Benefit from the early payment discount b. Do not benefit from the early payment discount 3. Take a line of credit from Suburban National Bank but for a different amount. Recommendation: Ratio Analysis (compare A/R, A/P turnover rate) Our group recommends that Mr Butler puts an end to his relationship with the Suburban National Bank. Butler Lumber Company needs more financial flexibility in order to sustain its growth and the bank is limiting the maximum loan to $250,000. Therefore, we recommend Mr Butler to start working with Northrop National Bank. Based on our EFN calculations we believe that $465,000 is too much for Butler Lumber Company. Indeed, we have found in our 6 scenarios that the maximum amount that Mr Butler could need would be $392,000. Therefore, we recommend Butler...
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...EXPORT OF COAL EXPORT OF COAL Coal is under Open General Licence (OGL) list. India exports coal to the neighbouring countries to meet their demand of coal. The traditional buyers of Indian coal are Nepal, Bangladesh and Bhutan. Export to Nepal and Bhutan is done in rupee exchange as per the protocol between the two countries and with Bangladesh it is done in US Dollar. Export of coal to the neighbouring countries was earlier canalised through the Mineral and Metal trading Corporation, but for the last few years it has been decanalised. Export of coal by CIL is made through tender route The quantum of coal exported by CIL during 2002-03 to the neighbouring countries was 12,650 tonnes. During 2003-2004 the quantity of coal exported by CIL was 35,831 tonnes (Provisional). IMPORT OF COAL As per the present Import policy, coal can be freely imported (under Open General Licence) by the consumers themselves considering their needs and exercising their own commercial judgments. Coking coal is being imported by Steel Authority of India Limited (SAIL) and other Steel sector manufacturing mainly to bridge the gap between the requirement and indigenous availability and to improve the quality of overall blend for technological reasons. Coal based power plants, cement plants, captive power plants, sponge iron plants, industrial consumers and coal traders are importing non-coking coal on consideration of transport logistic and commercial prudence as well as against export entitlements. Coke...
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...Finance Project On Evaluation OF Consumer Durable Firms Sumbitted By:(Section c) Team Members gazal gupta Varun Bansal TABLE OF CONTENTS * OVERVIEW * CALCULATIONS * WORKING * CONCLUSION Consumer Durables Overview of India’s Consumer Durables Market The Indian consumer durables segment can be segregated into consumer electronics (TVs, VCD players and audio systems etc.) and consumer appliances (also known as white goods) like refrigerators, washing machines, air conditioners (A/Cs), microwave ovens, vacuum cleaners and dishwashers. Most of the segments in this sector are characterized by intense competition, emergence of new companies (especially MNCs) and introduction of state-of-the-art models, price discounts and exchange schemes. MNCs continue to dominate the Indian consumer durable segment, which is apparent from the fact that these companies command more than 65 per cent market share in the colour television (CTV) segment. In consonance with the global trend, over the years, demand for consumer durables has increased with rising income levels, double-income families, changing lifestyles, availability of credit, increasing consumer awareness and introduction of new models. Products like air conditioners are no longer perceived as luxury products. Companies under Evaluation:- * Bajaj Electricals * HCL info Systems ltd * TTK Prestige Ltd * Value Industries Ltd * Voltas Ltd Calculations Calculation...
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...Flywheel Flywheel Dr Jordan Dimitrov ENGD1005 Mechanical Principles Zubair Khan P12227965 Dr Jordan Dimitrov ENGD1005 Mechanical Principles Zubair Khan P12227965 Index Objective…… ………………………………………………….…………...2 Introduction…………………………………………………………………..2 Theory…………………………………………….………………………..3, 4 Apparatus……………...…………………………………………………….5 Procedure……….…………………………………………………………..6 Results……………………………………………………………….…...7 - 11 Discussion……………………………………………………………….11, 12 Conclusion……………………………………………………………….…12 Reference…………………………………………………………………..12 Objective The objective of this experiment is to determine the moment of inertia of a flywheel and axle by experiment and compare it with the theoretical value. Introduction A flywheel is a heavy shaft-mounted rotating disc that absorbs and stores twisting or spinning motion and then releases it as rotational kinetic energy to provide motion to a stationary or nearly stationary object. [1] Flybrids (a variation of regular electromechanical hybrids) use a flywheel instead of a battery to store regenerative braking energy. This stored energy is used to initially propel (or assist the vehicle’s internal combustion engine) for powering and maintaining motion of the vehicle.[1] Application of a flywheel Flywheels can be used to store energy and used to produce very high electric power pulses for experiments, where drawing the power from the public electric network would...
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...Just for Feet, Case Study 1. Balance Sheets Just for FEET, Inc. | Balance Sheet | Years ending Jan 31st | | | | Current Assets: 1996 1997 1998 | Cash & Equivalents | 36.93% | 18.40% | 1.80% | Marketable Securities AFS | 9.04% | 0.00% | 0.00% | Accounts Receivable | 1.74% | 3.53% | 2.74% | Inventory | 35.47% | 45.97% | 58.01% | Other Current Assets | 0.56% | 1.50% | 2.65% | Total Current Assets | 83.75% | 69.40% | 65.20% | Property & Equipment, net | 14.61% | 21.08% | 23.29% | Goodwill, net | 0.00% | 8.05% | 10.31% | Other | 1.64% | 1.46% | 1.19% | Total Assets | 100.00% | 100.00% | 100.00% | Current Liabilities: | Short-Term Borrowings | 26.61% | 20.22% | 0.00% | Accounts Payable | 10.35% | 11.41% | 14.55% | Accrued Expenses | 1.46% | 2.07% | 3.60% | Income Taxes Payable | 0.11% | 0.30% | 0.13% | Current Maturities of LT Debt | 0.56% | 0.72% | 0.96% | Total Current Liabilities | 39.09% | 34.73% | 19.25% | LT Debt & Obligations | 2.76% | 5.48% | 33.51% | Total Liabilities | 41.85% | 40.21% | 52.75% | Shareholders' Equity: | Common Stock | 0.00% | 0.00% | 0.00% | Paid-In Capital | 50.69% | 48.76% | 36.20% | Retained Earnings | 7.47% | 11.03% | 11.04% | Total Shareholders' Equity | 58.15% | 59.79% | 47.25% | Total Liabilities & SH' Equity | 100.00% |...
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...APT COMPLEX | Colony Manor | | | | | | | | | | | | | | | | ADDRESS | 2520 Beatty Street | | | | | | | | | | | | | | | | CITY,STATE, ZIP | Houston, TX | | | | | | | | | | | | | | | | KEY MAP | | | | | | | | | | | | | | | | | Purchase Price | | $1,900,000 | | | | | | | Rental Grid | | | | | | | Rehab | | $158,562 | | | | | | | TYPE | SQ FT | # | Rent | SF | Mthly | Annual | | TOTAL PURCHASE PRICE | $2,058,562 | | | | | | | Total | 780 | 72 | 678 | 0.87 | 48783 | 585396 | | #/UNITS | | 122 | | | VACANCY RATE | | | 56,192 | Total SqFt | | | | | | | $/UNIT | | $26,389 | | | Actual | 8.50% | | | | | | | | | | | | | | Total Capital Req'd | | Yr1 | 9% | | | | | | | | | | | DOWN PAYMENT | 30.00% | $570,000 | $652,500 | | Yr 2 | 9% | | | Assumptions | | | | LOAN | | $1,488,562 | | | Yr 3 | 9% | | | T-12 thru July 2012 | | | | | | | INTEREST RATE % | | 4.5 | | | Yr 4 | 9% | | | Underwritten Expenses | | | | | | | TERM IN YEARS | | 30 | | | Yr 5 | 9% | | | August 2012 Rent Roll | | | | | | | ANNUAL DEBT SERVICE (P&I) | $90,507.90 | | | | | | | | | | | | | | | | | | | | Capital Improvements | | | Lender Fees | | | ASSUMPTIONS | | Actual | Yr1 | Yr 2 | Yr 3 | Yr 4 | Yr 5 | | Siding/Paint | $0 | | Lenders Fees | $8,000 | | Gross Rental Income | | $585,396 | $585...
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...ABB India Ltd Performance Highlights (Rs in Crores) CY11 CY10 %change Revenue 7,721.23 6,638.16 16.32 Gross Profit 393.67 186.87 110.67 PAT 184.54 63.23 191.86 ABB India has bounced back with promising numbers with net profit jumping to about 191%. The Gross Profit has increased and this has been mainly due to the improvement in power system business. Performance RATING: SELL The Net sales of ABB has increased to about 10% and it has registered a EBITDA Margin of 5.6% in this quarter. It has registered a loss in the power automation segment. There is cost overrun in two of the projects. Power crisis in India has also affected the Industry as a whole. Many Orders have been received in low voltage segment of products Considering slow down in industrial capex and pricing pressure in the industry which is impacting margins, ABB can be recommended as a SELL Industry Analysis Electrical Equipment Industry is one of the vital sectors for the contribution of each and every economy. In the current scenario, frequent outages due to the widening gap between the demand and supply of power in the state have now started affecting the electrical equipment manufacturing units. So the demand has been sluggish throughout. The Indian electrical equipment industry has reported a decelerated growth to 6.6% in 2011-12 as compared to 11.3% and 13.7% in 2009-10 and 2010-11, respectively, according to data compiled by the Indian Electrical and Electronics Manufacturers’ Association...
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...About Walmart: Since the 1980s, Walmart has grown to be the world leader in retail industry. And in the recent decade, the company has clocked higher growth in sales than growth in inventory. The growth in sales was significantly higher in 2007-10 though there was an unusual spur in inventory growth in 2011. Also the total income has been on a roll and has been showing a constant upward trend from 2002. Also, the total assets of the company has been showing a similar trend. | | Comparison of Walmart with its Competitors: The competitors of Walmart includes Target Corporation, Kroger Co., Costco Wholesale Cop., Safeway Inc, Amazon.com, Dollar General, Dollar Tree Inc, Big Lots Inc, Fred's Inc, Sears Holding Co., Walgreen Co., CVS Caremark Corporation, Carrefour and Tesco Plc. To study the relative performance of Walmart vis-a-vis its competitors, financial statements of all the companies given in Exhibit-3 were analyzed for each of the parameters as mentioned below: (a) Inventory Turnover Ratio (ITR)- Inventory turnover ratio is an important metric in retail industry as it shows how many times the inventory was sold through during a period. Higher value of the ratio indicates better performance if lost sales are taken care of by a company. This ITR has been calculated for Walmart and its competitors from their annual financial statements from Exhibit-3. INVENTORY TURNOVER RATIO (ITR) | | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | ...
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...Acer buys iGware for $320 million Taiwan's Acer Inc will buy U.S.-based cloud computing firm iGware Inc for $320 million, the fifth-largest ever Taiwanese buyout of a U.S. company, as it seeks to move beyond its core hardware manufacturing business . (Reuters , July 21) The aforementioned deal worth $395 million will make it the second largest Taiwanese purchase of an American company. The the only other Taiwanese deal to surpass this was Acer's purchase of U.S. PC maker Gateway Inc for $761.5 million in 2007. Acers move gives it membership in an elite yet growing club of tech companies (Apple, Hewlett-Packard and Microsoft) that offer cloud services to its consumer base. From a tactical stand point there are numerous inter-related trends which are now driving up the demand for cloud service. In fact the research firm Gartner has, for its 2015 prediction, noted a $73 billion market for cloud services. Cloud services will be drawn to the limelight of mobile computing with the rapid growth in the use of Internet-connected smartphones and other mobile devices, couple that with the increasing mobility of both private and corporate consumers, all of whom are always on the lookout for means to store and access data over the Internet. Considering that Acer, (the number 2 PC manufacturer in the world) is moving towards the mobile computing systems just like apple and android based offerings, it makes all the sense to purchase a company that can provide the means for vast...
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...Space Age Materials Working Capital Management Directed 1. External Funds Needed for 1993 EFN = (A/S)DS – (L/S)DS – MS(1-d) = (49.97%)$17.75 – (1.96%)17.75 – $5.41(66.74% = $4.91 2. Forecast of the firm’s financial statements and EFN for 1993: (in millions of dollars) | |1992 |Percentage of sales |1993 | |Balance Sheet | | | | |Cash and Securities | $ 2.18 |2.46% | $ 2.62 | |Accounts receivable | $ 7.10 |8.00% | $ 8.51 | |Inventories | $ 8.43 |9.50% | $ 10.12 | | Current assets | $ 17.71 |N.A. | $ 21.25 | |Net fixed assets | $ 26.63 |30.01% | $ 31.96 | | Total Assets | $ 44.34 |N.A. | $ 53.21 | |Accounts payable | $ 0.84 |0.95% | $ 1.01 | |Notes Payable | $ 1.23 |1.39% | $ 1.48 | |Accrued wages & taxes | $ 0.90 |1.01% | $ 1.08 | | Current...
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...Data Analysis Part 1 (Atwood’s Machine) – Formula and calculation of theoretical acceleration (ath) – A =(m1-m2)/(m1+m2) * g , ath= (0.17125-0.15125)/( 0.17125+0.15125)* 9.79 = 0.6083 m/s^2 % error = 0.05463/0.5592 *100 =9.76 % Formula and calculation of percent difference between ae and ath – % difference = (difference / A_th) *100 = (0.55992-0.6083) /0.6083 *100 =8.01% Part 2 (Springs in Series) – Hooke’s law equation – F = -Kx Calculation of spring constants, k1 and k2 using Hooke’s law equation – k1 = mg/ x = (2.75)/0.052 =52.9 k2 = mg/ x = (7.73)/ 0.058 = 90.9 Calculation of experimental keff for series combinations of springs – K eff = Fs / del(xs ) K = F/x =10.31 /0.052 =198.32 N/m Derivation of equation of theoretical keff – F = kx , F =mg X =...
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