...Ahmad Mohammad Analysis of Blaine Kitchenware Inc. case Brief Background Blaine Kitchenware Inc., a mid-sized producer of branded small appliances primarily used in residential kitchens, has a very conservative practices regarding taking debt. It only took debt twice in its entire history. An investment banker prompted the idea of repurchasing some of the company’s stocks to the CEO Mr. Dubinki. The CEO is not sure whether the repurchase will benefit the company or not. Problems with Blain current capital structure The main problems that I have noticed in Blain’s capital structure are * Heavy reliance on equity. * Zero debt * Surplus of cash Even though there are not problems at all with the company’s profitability, those problems above does not allow the company to operate at the maximum efficiency. Zero debt does not allow the company to benefit from tax shield. The firm is has extremely conservative practices regarding financing and they have only took debt twice in its entire history. On the other hand, heavy reliance on equity reduces the ROE, making it significantly lower that those of other competitors. Regarding the payouts, the dividend payout ratio had a dramatic increase from 35% in 2004 to 52.9% in 2006, which raises questions about the sustainability of cash growth. At the same time the Earning Per Share ratio (EPS) from 1.29 to 0.91. this is because there is a huge amount of shares available compared to the company’s net income. Actually...
Words: 658 - Pages: 3
...Blaine Kitchenware Inc. Case Analysis: Muhamad Fahad Sohail Table of Contents Blaine Kitchenware capital structure and payout policy 2 Advantages and Disadvantages of share repurchase move 2 New proposal by CEO TO repurchase stocks from the market and its analysis 3 Recommendation to the CEO as a family member and as an independent consultant 3 How does the proposal differ from paying a special dividend of $4.39 share instead? 4 Blaine Kitchenware capital structure and payout policy Blaine Kitchenware Inc.’s current capital structure is not efficient. The incentive for any public company and Board of Directors should be the increase the value of firm through projects, increased earnings per share value, and the lowering of costs. One way many firm’s effectively increase the value of the firm is to minimize the weighted average cost of capital. The weighted average cost of capital is the costs of a firm in the form of debt and equity. Since Blaine Kitchenware is a public company and issues shares, they have an established capital structure model. By taking on no debt, the value of the firm is unlevered and the firm does not gain the advantage of the interest tax shield. It is because Blaine Kitchenware Inc. has chosen to finance projects by the selling of shares and has not made use of debt issuance that the firm’s value is not fully maximized and the weighted average cost of capital is not minimized. If Blaine Kitchenware Inc. took on debt, the value of the...
Words: 1491 - Pages: 6
...Blaine Kitchenware Case Study Blaine Kitchenware has occupied the industry for over 80 years and continues to gain control in the market it occupies. As the CEO of the company, Mr. Dubinski is faced with the difficult decision of determining what is best for the family company. The following questions will address what decision is the optimal and why it is beneficial for BKI. Ans. 1) The main dilemma in the case is whether Blaine Kitchenware’s should choose to repurchase its own shares or not. If Blaine’s Kitchenware does repurchase its shares, they must consider whether to partially repurchase the market float or go for a complete buyback where Blaine’s family would become the owner of all the remaining shares. 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. 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. With this in mind we can consider a few situations and then decide what Blaine should do, keeping in mind the perspective of both the existing shareholders' as well as Blaine's family’s. Since no debt is being raised, if all the cash & cash securities plus the market securities are used for the buy-back, his family may like this option. Their management...
Words: 2265 - Pages: 10
...Blaines Kitchenware Blaine kitchenware has occupied the industry for a over 80 years and continues to gain control in the market it occupies. As the CEO of the company, Mr. Dubinski is faced with the difficult decision of determining what is the best for the family company. The following questions will address what decision is the optimal and why it is beneficial for BKI. * Do you believe Blaine’s current capital structure and payout policies are appropriate? Why or why not? The main dilemma in the case is whether Blaine Kitchenware’s should choose to repurchase its own shares or not. If Blaine’s Kitchenware does repurchase its shares, they must consider whether to partially repurchase the market float or go for a complete buyback where Blaine’s family would become the owner of all the remaining shares. 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. 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. With this in mind we can consider a few situations and then decide what Blaine should do, keeping in mind the perspective of both the existing shareholders' as well as Blaine's c family’s. Since no debt is being raised, if all the cash & cash securities...
Words: 2434 - Pages: 10
...Introduction Victor Dubinski, CEO of Blaine Kitchenware, Inc. had recently been made aware that a group of private equity investors made inquiries about a possible acquisition of Blaine. Dubinski knew that the family had absolutely no interest in selling, but he was still perplexed about how the private equity group could unlock some inherent value within their company. They wanted to use the cash on Blaine’s balance sheet and new borrowings to purchase all of Blaine’s outstanding shares at a price higher than its current stock price. After some thinking, he began to think about how he could complete a repurchase decision himself and thus stave off an unsolicited takeover. Blaine Kitchenware is a mid-sized producer of branded small appliances primarily used in residential kitchens. It was originally founded in 1927 as the Blaine Apparatus Company and produced then-novel electric home appliances. By the year 2006, Blaine had achieved a 10% share of the total $2.3 billion U.S. market for small kitchen appliances. Recently Blaine began expanding into foreign markets. A majority of their revenue was generated from shipments to U.S. wholesalers and retailers, but 35% of their sales came from Canada, Europe, Central, and South America. By the end of 2006, Blaine’s balance sheet was the strongest in the industry. They were debt-free and held $231 million in cash and securities. More recently, the company’s largest uses of cash had been dividends paid out to their shareholders...
Words: 1722 - Pages: 7
...Blaine Kitchenware Inc. Take-Home Case Assignment BSAD 342 Prof. Vishwakarma Grady McQuillan Joe Mackay Mitch Chown Alessandro Galeone Discussion questions • Do you believe Blaine’s current capital structure and payout policies are appropriate? Why or why not? The current capital structure and payout policies for Blaine’s Kitchenware Inc in our opinion is not the most appropriate. The firm’s structure is invested primarily in equity, for the most part (other than twice in their history) not incurring any debt. Although the company originally seemed to pride itself in not incurring debt it’s evident that it has long-term affects on the value of the firm. Whether they considered that less debt would provide them with less risk or not, the fact is that they are not maximizing the value of their firm completely by staying away from debt financing. Although risk will increase when their debt increases, debt financing will lower the cost of capital primarily due to tax reduction. The firm will never reach their full potential by acting this conservative with their financing, and in return this affects their shareholders and payout policies. As stated in the case, “Despite the company’s profitability, returns to shareholders had been somewhat below average”. This is due directly to their net income and the amount of book equity. Subsequently, Blaine’s ROE in 2006 was extremely lower than that of its peers. This creates a big...
Words: 1891 - Pages: 8
...CASENI N etFlix.com, Inc. In July 2000, Reed Hastings, chairman ,md CEO of NetFlix.com, Ine., faced a criticaI deci:;jon. Thrl'C months earlier, following one of tl1l' worst episodes O!l record for the NASDAQ market, NetFlix had submitted it:; 5-1 filing for its initial Pllblic offering (Iro).! A:; il rl'sult of thl' market downturn, many Internet companies had been forced to withdraw their 1['0s. Invl,:-;tment bankers indicated to Hastings that NetFlix would 11(.'Cd to show positive cash flows within a twdw-month horizon in order to have a succes.,,,flll offering. Hastings knew that NetFlix was at a crucial stage. With revenU($ doubling evcry six months, NetFlix was enjoying tremendolls stlccess. But continucd succcss depcnded on thl' company's ability to sustain triple-digit growth (or the fOfesceable future. Soon, Hastings would have to decide whether or not to proceed with the company's anticipated IPO. Hastings askl..'\l Barry McCarthy, the chicf finnnciai officer, to re-('vnluate the cash flow requircments of thc company's currcnt business pian, to suggest modificùtions that would improvc the company's projected cnsh flows, and to makc ù rccommcndation on whether the company should go forward with its plùnned offcring. As McCarthy rcviewed the existing NetFlix business model, hl' considered possiblc chùnges that might allow thc company to procccd with its planncd IPO ùnd yet sustùin thc typc of futtlrl..' growth that would be nccL,:-;sary for thc compùny to achieve...
Words: 544 - Pages: 3
...4040 OCTOBER 08, 2009 TIMOTHY LUEHRMAN JOEL HEILPRIN Blaine Kitchenware, Inc.: Capital Structure On April 27, 2007, Victor Dubinski, CEO of Blaine Kitchenware, Inc. (BKI), sat in his office reflecting on a meeting he had had with an investment banker earlier in the week. The banker, whom Dubinski had known for years, asked for the meeting after a group of private equity investors made discreet inquiries about a possible acquisition of Blaine. Although Blaine was a public company, a majority of its shares were controlled by family members descended from the firm’s founders together with various family trusts. Family interests were strongly represented on the board of directors as well. Dubinski knew the family had no current interest in selling—on the contrary, Blaine was interested in acquiring other companies in the kitchen appliances space—so this overture, like a few others before it, would be politely rebuffed. Nevertheless, Dubinski was struck by the banker’s assertion that a private equity buyer could “unlock” value inherent in Blaine’s strong operations and balance sheet. Using cash on Blaine’s balance sheet and new borrowings, a private equity firm could purchase all of Blaine’s outstanding shares at a price higher than $16.25 per share, its current stock price. It would then repay the debt over time using the company’s future earnings. When the banker pointed out that BKI itself could do the same thing—borrow money to buy back its own shares—Dubinski had asked...
Words: 3389 - Pages: 14
...UNIVERSIDADE ESTÁCIO DE SÁ MBA EM GESTÃO FINANCEIRA E CONTROLADORIA Fichamento de Estudo de Caso Lidiane Regina Nogueira das Neves Trabalho da disciplina Fundamentos da Matemática Financeira e Estatística Aplicada Prof. Geraldo Gurgel Filho Itaituba – PA 2015 Estudo de caso: Blaine Kitchenware Inc.: estrutura de capital FUNDAMENTOS DA MATEMÁTICA FINANCEIRA E ESTATÍSTICA APLICADA Blaine Kitchenware Inc. REFERÊNCIA: LUEHRMAN, T. & HEILPRIN, J. Blaine Kitchenware Inc.: estrutura de capital. Boston, MA: Harvard Business School, caso LACC # 413-P02, 8 de Outubro de 2009. Os autores descrevem a atividade da empresa de capital aberto Blaine Kitchenware Inc. e em seguida fazem uma análise do seu desempenho financeiro e políticas financeiras. A BKI é uma empresa de médio porte, fabricante de eletrodomésticos para cozinhas residenciais, cuja “maioria das ações pertencia a descendentes dos fundadores da empresa, assim como a diversos trusts da própria família” (p.1). A Blaine tinha pouco menos de 10% do mercado e o setor cresceu apenas 3,5% anuais de 2003 a 2006 devido a concorrência com importados e preços agressivos dos hipermercados. Esta atuava em três segmentos: utensílios para preparo de comida, para cozinhar e para o preparo de bebidas, sendo os dois primeiros os de maior geração de receita. A empresa introduziu no mercado produtos com tecnologia “smart”...
Words: 707 - Pages: 3
...CHAPTER I Technical Aspect This chapter describes the activities to be done before the business will operate as a business. -Target Opening Date: July 1, 2009 Table 1 Pre-Operational Activities |Business Plan |Target Dates | |Renovation of the Business Space |June 8- 15, 2009 | |Application of Permits and Licenses |June 11-25, 2009 | |Selection and Buying of Equipment and Office Furniture |June 16-25, 2009 | |Arranging and Positioning of Equipment and Furniture |June 26-27, 2009 | |Trial Operation |June 28, 2009 | |Normal Operation |July I, 2009 | | | | Table I shows the different activities that “YOUR CHOICE FOOD SERVICE” will have to accomplish from the month of June 2009 until the business will start on July 1, 2009. It reflects the planned activities before the...
Words: 1952 - Pages: 8
...JOB E: Career Opportunities: Dishwasher SUMMARY: As a Dishwasher you will be responsible for ensuring that our production teams have sanitary tools and workspaces. This includes all duties related to dishwashing: unloading kitchen deliveries and cleaning all of the dishes, utensils, pots and pans. Other areas of responsibility include food prep work and maintaining food quality and sanitation in kitchen. DUTIES: - Wash, rinse, and sanitize dishes, pots, pans, and implements used by the store in preparing foods for sale. - Follow and comply with all applicable health and sanitation procedures and adhere to safe work practices. - Maintain cleanliness of floors, mats, drains, walls and shelves of kitchen area. - Operate and sanitize all equipment in a safe and proper manner. - Perform food preparation work as directed. - Accept and process product from Receiver. - This job posting is intended to describe the general requirements for the performance of this job. It is not a complete statement of duties, responsibilities or requirements. Other duties not listed here may be assigned by leadership. REQUIREMENTS: - Ability to follow instructions and procedures. - Good interpersonal skills and willingness to work as part of a team. - Strong work ethic and integrity. - Available for flexible scheduling to meet the needs of the department. - Use of box cutters. Essential Job Functions: * Stand and walk for extended periods of time. * Bend and stoop to grasp...
Words: 291 - Pages: 2
...Cortney Bramlette AP Language Mrs. Richards 3-21-14 Author Essay #9 The general argument made by Dave Barry in Turkeys in the Kitchen is the men are raised one way, and women are raised another. That does not mean that they are incapable of doing each others stereotyped jobs, it just means that women are born better at cooking and cleaning while men are born better at fixing cars and eating the food women cook. (Okay that might be a little sexist, but slightly true.) Dave believes that men not knowing how to do anything right in a kitchen and women knowing the in’s and out’s of every kitchen utensil dates back to the pre-feminism era and the sexism of it. When asked to cut up a turnip, this is what goes through Dave’s head. “Now to the woman, who had all the sexist Home Economics training back in the pre-feminism era, this is a very simple instruction. It is the absolute simplest thing she can think of. But to the man, who got his training in Shop Class, learning things he would never ever need to know for the rest of his life, such as how to make “dado” joints, this instruction raises many troubling questions.” It seems as though Dave almost finds it unfair that he was never taught the correct way to cut up a turnip. He goes on to say that even once he picked up a zucchini (hoping it would be the turnip he was supposed to be cutting up) his wife “much too patiently” took it from his hands and replied with “That’s all right. I’ll do it.” If he only would be taught...
Words: 592 - Pages: 3
...MKTG 305 UNIT 2 DB Chasity Fenn PRODUCT The product that I would like to introduce is a new brand of pot and pan line. These pots and pans are different from any other kind of set that you have ever seen. All of these pots and pans are hard anodized and completely non-stick, which this part alone is not any different from a normal pot and pan set. The difference with these pots and pans is the easy way they can be cleaned. The non-stick on these pots and pans are something no one has ever seen before. Nothing at all sticks to these pans! With other non-stick pans you may have to use cooking spray or oil, but with these there is no need. If that is not enough to get someone to buy, the pots and pans can be customized. You can have any design, colors, pictures, or even engravings put on these pots and pans. No other product can give their customers this kind of personalization. TARGET AUDIENCE The target audience would most definitely be adults ranging from ages 20-60. The benefit of this product is that the age range of the target market is very large; this gives this product a chance to become very popular. Another big target is restaurant owners or top ranking chefs. Chefs love to use their own utensils and cookware when cooking, so I believe this would be an excellent choice of cookware for them. ENDORSER AND SONG The number one endorser that I think would sell this product in a heartbeat is Chef Gordon Ramsey. Chef Ramsey is one of the most known chefs in the...
Words: 517 - Pages: 3
...1 Executive summary This report discusses the feasibility of opening up a Public Kitchen which is served for college students in China. It is necessary to use several management research tools to assess the feasibility, such as PESTLE, Porter’s Five Forces and Cash Flow, based on those researches, it seems that this business could success and have much developing space to improve itself in the future, for example, adding more recreational facilities in ‘Our Kitchen ’ to attract more customers. 2 Introduction The reason why I choose China as the target market is that I come from China and I am more familiar with the Chinese market than the United Kingdom’s, especially Chinese colleges and students. When I arrived at my new dormitory in the University of Birmingham, I was shocked by the big and bright kitchen for 15 students. There is no public kitchen in Chinese colleges, so almost all the students must have three meals in one or several crowded canteens or order takeout every day. As a new graduate from a Chinese college, I could realize that some students are eager to cook for themselves or host a party with their friends. What they calling for is a comparatively private and comfortable environment. At the same time, I know economic environment around Chinese colleges well. Thus I come up with an idea that launching a public kitchen for college students and it could be a brand new food service in the market of Chinese colleges. Moreover, if the idea were to come true...
Words: 3390 - Pages: 14
...My Kitchen As I smell the aroma of brownie batter awaiting its trip to the oven, and the sizzling marinated chicken on the stove, I am reminded that my kitchen is the home to many of my memories that include everything from happy birthday dinners to troubled moments. Naturally, I gravitate towards my kitchen, because of its warm and cozy vibes. Not only is my kitchen a place where I am able to eat my worries away, but also a place where my mind is most capable. Whether I’m struggling with a math problem, or just need a place to release stress from a long day, my kitchen is always there. To the left, the large white refrigerator is the first piece of furniture that meets the eye. Across from what I have dubbed “the fridgerator” is the granite countertop that holds the sink and features a shiny metal paper towel roll. Catty cornered from the refrigerator is a stainless steel stove that, at closer inspection, reveals the wear and tear of many years of oil stains. The wooden pantry door holds an abundance of junk food, which my dad keeps thus stocked against my mother’s wishes. The other cabinets in the kitchen contain a large collection of pots and pans, as well as a plethora of unused electronic devices given as gifts throughout the years. The enormous dark brown kitchen table, which comfortably seats eight in a three-person house, is home to scattered paperwork and my over filled backpack. The table is surrounded by windows, which display a three hundred and sixty degree...
Words: 920 - Pages: 4
