...How Eastboro’s Stock was affected after the events of Sept.11. The events of September 11th, 2001 had caused Eastboro’s stock to drop by eighteen percent and earning since 1996 had been considerably less than the previous five years in which the firm enjoyed high earnings and stable dividend growth. Jennifer Campbell, CEO of Eastboro Machine Tools Corporation, faced the important question of whether to use the company’s funds to pay dividends or use the funds to repurchase shares? We would recommend the company to pursue a zero-dividend payout policy since the company is a growth firm. The only method of generating funds Eastboro’s management would be willing to undertake under their current policy is issuance of stock. This has negative connotations for shareholders because stock issuance would dilute shareholder equity If Eastboro were to have a zero dividend policy, after two years they would be able to generate excess cash rather than borrowing for their financing needs. There would be no additional debt added and excess cash would be used to pay off existing debt. If the firm were to pursue a twenty percent payout policy they would borrow for four years and have excess cash for three years. If the company were to pursue a forty percent payout policy they would have to borrow for six years and would have excess cash for one year. If the company pursued a residual policy, it would result in all retained earnings being paid out as dividends, and is therefore, unfavorable...
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...1. In theory, to fund an increased dividend payout or a stock buyback, a firm might invest less, borrow more, or issue more stock. Which of these three elements is Eastboro management willing to vary, and which elements remain fixed as a matter of policy? Management is willing to vary their investment (investing less) as well as issue more stock. This is not against their policy. But the management would not be willing to borrow more as their borrowing policy is limited to 40% debt to equity ratio. 2. What happens to Eastboro's financing need and unused debt capacity if , a. No dividends are paid? If no dividend are paid, the company does not need financing required for the dividends. Hence the company’s financing needs decreases. If the company pays 40% dividend, they need to borrow $30 million in 2001 and if no dividend is paid, they only need to borrow $23 million. Hence the unused debt capacity also increases if no dividend is paid. b. 20 percent payout is pursued? If 20% dividend payout policy is pursued, the amount needed for dividend would be $3.6 million as opposed to $7 million (with a 40% payout). The company requires less financing and hence the financing needs decreases as opposed to a 40% dividend payout. Also the unused debt capacity would decrease as the company needs to borrow $26.6 million as opposed to $30 million (with a 40% payout). c. 40 percent payout is pursued? If 40% dividend policy is pursued, the financing needs of...
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...Deutsche Brauerie A director of small German brewery must prepare to vote on three issues: 1. approval of financial plan for 1993, 2. quarterly dividend declaration, 3. incentive compensation plan. 1. What accounts for Deutsche’s rapid growth in recent years? What policy choices account for this success? 2. What is Deutsche’s credit policy toward its distributors in Ukraine? Why is it different from the policy toward its other distributors? Is the company’s credit policy appropriate? Is it profitable? If not, how to change it? 3. Why does this firm need increasing amounts of bank debt? 4. As a member of BoD, how would you vote on: o The proposed raise for Oleg Pinchuk o The quarterly dividend declaration of €698,000. o Adoption of the financial plan for 2001? Spreadsheet file: Available Donaldson, Lufkin & Jenrette 1995 (Abridged) 1. Why is Equitable considering selling an interest in DLJ? 2. What are the relative advantages and disadvantages of carve-outs, spin-offs and divestiture through cash sale? 3. What is your estimate of DLJ's fair value per share? In answering this question, please draw upon as many valuation approaches as you can. Give special attention to the valuation multiples of DLJ’s peers. Who are these peers? Why do they qualify as peers? 4. At what price should DLJ be offered? Think carefully about your answer here. The offering price need not be identical to your answer to question 3. If answers to 3 and 4 differ, please prepare...
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...Eastboro Machine Tools Corporation Eastboro Machine Tools Corporation Problem Statement When considering whether or not it is necessary to pay dividend, Eastboro Machine Tools Corporation is facing a problem, i.e. how to provide enough cash to ensure the upcoming aggressive growth in the following years. If dividend is necessarily paid, how much dividend will be paid to benefit the shareholders most in the long run? Situation Analysis After two massive restructurings, the firm seems to get in a quick track to development. Its product “Artificial Workforce” appears to have a bright future. Most of securities analysts are optimistic about the product’s impact on the company. That’s why Campbell took the boldest approach by assuming that the company would grow at a 15% compound rate. However, we have noticed that whether or not the 15% growth rate could be achieved heavily depends on the financial decision and the dividend decision even if the firm has good opportunity to generate satisfactory free cash flow to firm (FCFF). Thus, in order to ensure the maximization of the shareholders’ long-term benefits, Ms. Campbell has to take a close look at how the dividend decision impacts the financial decision and the resultant effects on investment decision and the market values of the entire firm and the equity. As the case indicates, Campbell has five options: Zero-dividend, 40%-dividend, Residual-dividend, stock repurchase and not to matter. In my mind, Campbell’s...
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...assignment should be completed in Word format. Please show all workings. 3. Late assignments will not be accepted unless arrangements have been made with myself before the due date. EASTBORO MACHINE TOOLS CORPORATION In mid-September of 2001, Jennifer Campbell, chief financial officer of Eastboro Machine Tools Corporation, paced the floor of her Minnesota office. She needed to submit a recommendation to Eastboro’s board of directors regarding the company’s dividend policy, which had been the subject of an ongoing debate among the firm’s senior managers. Compounding her problem was the previous week’s terrorist attacks on the World Trade Center and the Pentagon. The stock market had plummeted in response to the attacks, and along with it Eastboro’s stock had fallen 18 percent, to $22.15. In response to the market collapse, a spate of companies had announced plans to buy back stock, some to signal confidence in their companies as well as in the U.S. financial markets, and others for opportunistic reasons. Now Jennifer Campbell’s dividend-decision problem was compounded by the dilemma of whether to use company funds to pay out dividends or to buy back stock instead. BACKGROUND ON THE DIVIDEND QUESTION After years of traditionally strong earnings and predictable dividend growth, Eastboro had faltered in the past five years. In response, management implemented two extensive restructuring programs, both of which were...
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...Eastboro Machine Tools Corporation Problem Statement When considering whether or not it is necessary to pay dividend, Eastboro Machine Tools Corporation is facing a problem, i.e. how to provide enough cash to ensure the upcoming aggressive growth in the following years. If dividend is necessarily paid, how much dividend will be paid to benefit the shareholders most in the long run? Situation Analysis After two massive restructurings, the firm seems to get in a quick track to development. Its product “Artificial Workforce” appears to have a bright future. Most of securities analysts are optimistic about the product’s impact on the company. That’s why Campbell took the boldest approach by assuming that the company would grow at a 15% compound rate. However, we have noticed that whether or not the 15% growth rate could be achieved heavily depends on the financial decision and the dividend decision even if the firm has good opportunity to generate satisfactory free cash flow to firm (FCFF). Thus, in order to ensure the maximization of the shareholders’ long-term benefits, Ms. Campbell has to take a close look at how the dividend decision impacts the financial decision and the resultant effects on investment decision and the market values of the entire firm and the equity. As the case indicates, Campbell has five options: Zero-dividend, 40%-dividend, Residual-dividend, stock repurchase and not to matter. In my mind, Campbell’s ultimate target is to guarantee...
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...Thermo Fisher China U Training Catalogue 赛默飞世尔中国大学 2011 年课程目录 前 言 亲爱的同事们， 在赛默飞世尔，员工的学习和发展一直是我们关注的重点。因此，赛默飞世尔中国大学在 2011 年仍将一如既往地推出一系列培训课程， 以帮助每位员工获得专业知识和个人能力的提升， 从而带动赛默飞世尔更大的成功。 赛默飞世尔中国大学 2011 年的培训目录将包括卓越领导、个人成长、业务专家、基础技 能和公司文化等 5 个系列。同时我们还将提供不同形式的培训，如课堂培训、公开研讨会、讲 座以及在线学习等，这些都将进一步提升和完善您的能力。 我们希望您和您的经理在 PMD 评估过程中，能认真讨论您的培训需求、明确培训的期望 与目标，进而在这本 2011 年的课程目录中选取合适的课程。您的发展您做主！ 本年度的培训报名截止日期为 2011 年 2 月 28 日。 编者寄语 Preface Dear Colleagues, Training and development are key focuses within Thermo Fisher. Thus, Thermo Fisher China U will continuously provide a series of training courses for you as we did before to help you upgrade your expertise knowledge as well as individual ability. All this will bring Thermo Fisher a greater success. The 2011 Thermo Fisher Training catalogue includes 5 categories: Leadership excellence, individual success, functional expertise, basic skill, company culture. At the same time, we will provide a variety of di erent programs including classroom training, lectures, seminars and e-learning programs to provide you the chance to further improve your skills. We expect you to communicate the expectation, objective with your manager while PMD discussion so that you can choose the appropriate course through this booklet. You are the owner of your development. The deadline of training nomination is Feb.28, 2011. Editor’s note 关于学习管理系统 赛默飞世尔总部于 2010 年 12 月 16 日正式启用学习管理系统（LMS） 。该系统是一种应 用软件，将用来管理、记录、追踪和报告培训项目如课堂培训、在线培训和网络培训等。 建立学习管理系统（LMS）的主要目的是为所有员工增加培训的机会、方便培训内容的...
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...MBA Program Course: Financial Analysis and Decision Making MBA730 Instructor: Marlena L. Akhbari Wright State University Finance and Financial Services McGraw-Hill/Irwin =>? McGraw−Hill Primis ISBN: 0−390−42334−3 Text: Case Studies in Finance: Managing for Corporate Value Creation, 4/e Bruner This book was printed on recycled paper. MBA Program http://www.mhhe.com/primis/online/ Copyright ©2003 by The McGraw−Hill Companies, Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without prior written permission of the publisher. This McGraw−Hill Primis text may include materials submitted to McGraw−Hill for publication by the instructor of this course. The instructor is solely responsible for the editorial content of such materials. 111 MBAP ISBN: 0−390−42334−3 MBA Program Contents Bruner • Case Studies in Finance: Managing for Corporate Value Creation, 4/e II. Financial Analysis and Forecasting 1 1 6 16 16 39 52 52 60 66 66 84 100 100 6. The Financial Detective, 1996 11. ServerVault: ‘‘Reliable, Secure, and Wicked Fast’’ III. Estimating the Cost of Capital 12. ‘‘Best Practices’’ in Estimating the Cost of Capital: Survey and Synthesis 15. Teletech Corporation, 1996 IV. Capital Budgeting and Resource Allocation 19. Diamond...
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...Six months ago I wrote a report titled “How to Hack the Stock Market”. The report is just 62 pages long but it explains a specific stock market loophole I use to make roughly $10,000 a month. After first writing the report I sold it to experienced traders from an online investing community. Within weeks some of the traders were exploiting the loophole and making thousands of dollars. Because of that success I decided to create this website and sell the report online. I apologize for the short quiz I just had you fill out... I only want to teach this strategy to those who will actually put it to use. If someone couldn’t answer those simple questions, they will not have the drive or motivation to make this work. I could write a killer ad for my report. I could fill it with testimonials from successful students and even show you proof of my earnings. But I’m not going to do that – I hate those late night infomercials more than anyone else I know. Instead, I’m just going to let you read Chapter 1 of my report. (I’ve reproduced it below). But first, I need to tell you something. Some of my friends and clients laugh at the title of the report. I mean, I admit "How to Hack the Stock Market" is a little kitsch. But I called it that because... My report won't teach you about "life". I'm not gonna bore you with mindless drivel about personal finance and achieving your dreams. If you want that stuff buy 'Rich Dad Poor Dad'. Or any of the other "get rich quick" books...
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...assignment should be completed in Word format. Please show all workings. 3. Late assignments will not be accepted unless arrangements have been made with myself before the due date. EASTBORO MACHINE TOOLS CORPORATION In mid-September of 2001, Jennifer Campbell, chief financial officer of Eastboro Machine Tools Corporation, paced the floor of her Minnesota office. She needed to submit a recommendation to Eastboro’s board of directors regarding the company’s dividend policy, which had been the subject of an ongoing debate among the firm’s senior managers. Compounding her problem was the previous week’s terrorist attacks on the World Trade Center and the Pentagon. The stock market had plummeted in response to the attacks, and along with it Eastboro’s stock had fallen 18 percent, to $22.15. In response to the market collapse, a spate of companies had announced plans to buy back stock, some to signal confidence in their companies as well as in the U.S. financial markets, and others for opportunistic reasons. Now Jennifer Campbell’s dividend-decision problem was compounded by the dilemma of whether to use company funds to pay out dividends or to buy back stock instead. BACKGROUND ON THE DIVIDEND QUESTION After years of traditionally strong earnings and predictable dividend growth, Eastboro had faltered in the past five years. In response, management implemented two extensive restructuring programs, both of which were...
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...less, borrow more, or issue more stock. Taking into consideration company’s policy, it is more likely that eastboro management is willing to borrow a little bit more or issue more new stocks, and reject the third scenario which is investing less. Competition in the development of software and the integration of design and manufacturing has become severer. As a matter of fact Eastboro company even fell behind. To solve the problem of losing its position in the market, Eastboro company had to undergo some restructurings and increase development of CAD/CAM. It is believed that these measures will redefine the industry. Moreover it was expected increase in revenues due to new developed products. Growth in sales would depend on the creation of system improvements and add-on features. Since NPV of all projects is positive it is unlikely that the company would invest less. On the other hand there is another opportunity to fund dividend payout through debt financing. ( raising money by selling bonds, bills or notes to individual or institutional investors). It should be noted that the company is against a high debt-to-equity ratio. Therefore debt-to-equity ratio can be only slightly increased. At the same time Too high level of financial leverage reduces the likelihood to pay dividends in the following years Issuing more stocks also seems to be preferable to the company. Eastboro can raise some amount of money to pay out dividends. high growth and investment opportunities will need...
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...PROBLEM STATEMENT In mid September 2001, Jennifer Campbell, the chief financialofficer of Eastboro Machine Tools Corporation, a large CAD/CAM (computer-aided design andmanufacturing) equipment manufacturer must decide whether to pay out dividends to the firm’sshareholders, or repurchase stock. If Campbell chooses to pay out dividends, she must alsodecide on the amount of the payout and how it would affect the company going forward. Anadditional question is whether the firm should embark on a campaign of corporate-imageadvertising and change its corporate name to reflect its new outlook of being a moretechnological company.When considering whether or not it is necessary to pay dividend to shareholders, EastboroMachine Tools Corporation have a problem, the problem is the correct decision andimplementation of Eastboro's dividend policy. In that it has to decide how to provide enoughcash to ensure the upcoming aggressive growth of 15% compounded in the following years. SITUATION ANALYSIS After two massive restructurings, the firm has established itself as anindustry leader in CAM/CAD technology business. Its product being the “Artificial Workforce”appears to have a bright future. Most of securities analysts are optimistic about the product’simpact on the company. This is why Campbell took the bold approach to assuming that thecompany would grow at a 15% compound rate. For 3 years in a row since 1996, dividends hadexceeded earnings, except in 1999, dividends were decreased to a...
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...POST GRADUATE PROGRAMME IN MANAGEMENT AY 2015-16 TERM: III TITLE OF THE COURSE: FINANCE II CREDITS: 4 Name of the Faculty Arnab Bhattacharya Gaurav Singh Chauhan Kousik Guhathakurta Radha M. Ladkani Faculty Block/ Room No. J BLOCK C-102 A-106 J BLOCK Email Telephone Number arnabb@iimidr.ac.in gauravs@iimidr.ac.in kousikg@iimidr.ac.in; radhal@iimidr.ac.in; 0731-2439589 0731-2439592 0731-2439518 0731-2439698 COURSE DESCRIPTION The second core course in Finance deals with the core corporate finance functions in an applied setting. The participants are exposed to real world corporate finance decisions to be taken up by managers for creating value. Such an exposure is accomplished through a mix of theory and practice. The pedagogy employed reflects a judicious mix of case discussions, lectures and problem solving approach. COURSE OBJECTIVES The objective is to familiarize participants with the three major decision areas of Corporate Finance, viz. the investments, financing and earnings distribution decisions. Subsequently the participants are to be offered an integrated view of the decision areas by discussing the issues in corporate valuations and risk management. The course aims at sharpening the financial decision making skills of the participants. EXPECTED LEARNING OUTCOMES AND ASSOCIATED MEASURES At the end of the course student is expected to accomplish the following learning outcomes. Alignment of Course Learning Outcomes (CLOs)...
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