...Wal-Mart Integrative Management Exercise Cohort A, Learning Group 8: Shareholder Perspective 1) Why have Wal-Mart shares outperformed the market during the recent crisis recession? a. Investors expect that more people will shop at Walmart and therefore buy more shares b. Compared to the market (when many other areas are down) c. They have a business that performs well when other businesses are down d. Increased unemployment, more people buying groceries at Walmart e. Article on performance compared to Costco in the recession i. http://www.theophania.net/acct5331.tp1.pdf 2) What are the key drivers of Walmart shareholder value going forward? Walmart faces significant headwinds as the #1 retailer in the world. At revenues of 460B annually they’ve operated on very small margins and massive scale while continuing to grow. Their continued growth of net income will be essential to driving shareholder value. This becomes more challenging using the same approach they have in the past. If they fail to maintain their net income they’ll struggle to continue increasing their dividends and share buybacks which have provided a significant amount of value back to shareholders (over 100b). Going forward, Walmart will have to leverage their strengths in new areas. An effective Ecommerce strategy that connects online with their strengths in offline could be a significant sources of additional revenue and income. A successful strategy...
Words: 763 - Pages: 4
...and, at 9%, if projections are not met it could have a severe negative impact on shareholder earnings. Likewise, if moderate projections are met than issuing shares to cover the cost of expansion will have an adverse effect on dividends due to ‘watering’ down the profits among a larger number of shares. Recommendation The structure that I would recommend is to raise the $600,000 is 50% preferred stock issued (with 5% dividend interest and $50 par) and 50% common stock. The reason for this allows stability to the company and maximizes their earnings per share based on the low and moderate estimates provided. For instance, if the low is hit (approx. $75,000) then the earnings per share for investors is $.032 per share, only very slightly ($.001) than offering 20% bonds paying 9% and 80% common stock. If the entire amount is issues in bonds that pay 9% shareholders are put at a serious disadvantage if the company hits the low estimate ($.016 vs $.032 earnings per share or exactly half). Likewise, if the amount of sales is at the moderate level ($109,000) then the earnings per share is $.052 versus $.051 for the and $.042 for issuance of all bonds. The issue that I have with the 60% of the capital raised at 9% bonds and the rest in common stock is that at either the low or moderate projections, the short-term earnings per share is less than with the common and preferred mix recommended. Capital Budget It is very difficult to project costs and expenses for future projections because...
Words: 353 - Pages: 2
...MUMBAI S I L IC O N VA L L E Y B A N G A LO R E S IN G A PO R E M U M B A I- B KC NEW DELHI M U N IC H Public M&As in India: Takeover Code Dissected A detailed analysis of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 August 2013 © Copyright 2013 Nishith Desai Associates www.nishithdesai.com M&A Lab Takeover Code Dissected About NDA Nishith Desai Associates (NDA) is a research based international law firm with offices in Mumbai, Silicon Valley, Bangalore, Singapore, New Delhi and Munich. We specialize in strategic legal, regulatory and tax advice coupled with industry expertise in an integrated manner. We focus on niche areas in which we provide significant value and are invariably involved in select highly complex, innovative transactions. Our key clients include marquee repeat Fortune 500 clientele. Our experience with legal, regulatory and tax advice coupled with industry expertise in an integrated manner allows us to provide the complete strategy from the onset through to the full set up of the business and until the exits. We focus on niche areas in which we provide significant value add and are involved in select highly complex, innovative transactions. Core practice areas include Mergers & Acquisitions, International Tax, International Tax Litigation, Fund Formation, Fund Investments, Litigation & Dispute Resolution, Capital Markets, Employment and HR, Intellectual...
Words: 24805 - Pages: 100
...superstore concept in 1986 and has annua sales Revenues ($B)1 2007 2008 2009 2010 2011 2010 2011 Diluted Earnings Per Share 3 in the world in eCommerce sales. With 88,000 associates worldwide, Staples operates in 26 countries throughout North and South America, Europe, Asia and Australia, making it easy for businesses y r of all sizes and consumers. f The company is headquartered outside Boston. More information about Staples (Nasdaq: SPLS) is available at www.staples.com/media. Cash Flow Generation ($M) of $25 billion, ranking second f Operating Cash Flow 2007 As Adjusted 2007 2008 2009 2010 2011 2008 2009 2010 2011 Free Cash Flow Capita Expenditures 2007 2008 2009 2010 2011 Stores Open at Fiscal Year End 2007 Dividends Per Share 2008 2009 2010 2011 1 2 2008 revenues include $4.2 billion of revenues from Corporate Express for the period July 2008–January 2009. f 2008 revenue mix includes $2.3 billion of North American Delivery revenues and $1.9 billion of International revenues from Corporate Express for the period f f July 2008–January 2009. 3 – 2007 excludes a $38.0 million ($0.04 per share) charge related to the settlement of California wage and hour class action litigation. 2008 excludes $173.5 million f ($0.16 per share) of charges related to integration and restructuring associated with Corporate Express....
Words: 117583 - Pages: 471
...Sun Coast Savings Bank was founded in l97l in Safety Harbor, Florida, which is just across the bay from Tampa. Safety Harbor is very popular with people who work in Tampa but do not wish to live within the city itself. Per-capital income in SafetyH arbor is substantially above the national average; in fact, the town has a reputation for having the greatest population of BMWs and Mercedes Benzes per capita in the United States. The combination of an increasing population, high per capita income and a huge demand for funds to finance new home construction has made Sun Coast the fastest-growing association in the state in terms of both assets and earnings. Although Sun Coast is very profitable and has experienced rapid growth in earnings, the company's quick expansion has put it under severe financial strain. Even though all earnings have been retained, the net-worth-to-assets ratio has been declining to the extent that, by 2000, it was just above the minimum required by federal regulations(see T able l). Table 1 Sun Coast Savings Bank Balance Sheet for Year Ended December 31, 2000 Assets Cash & Marketable Securities $83,441,700 Mortgage Loan 815,235,000 Fixed Assets 60,423,300 Total Assets $959,100,000 Liabilities Savings Account $817,153,200 Other Liabilities 83,077,000 Capital Stock ($100 par value) 900,000 Retained Earnings 57,969,800 Total Claims $959,100,000 ***Note: Federal law...
Words: 1657 - Pages: 7
...shareholder-guarantors. VAFLA made all of the loan payments, principals and interest to the bank and the appellants did not. Neither VAFLA nor the shareholder-guarantors treated the loan as constructive income taxable to the shareholder-guarantors. Because the bank lent the loan to the shareholder-guarantors and then they contributed the funds to the corporation, the appellants present that the loan is a capital contribution from appellants to VAFLA. If it is characterized as equity, they should be entitled to add a pro rata share of the loan to their adjusted basis. The Tax Court disallowed such increase in basis. Issues: The issue is whether the shareholder-guarantors should add a pro rata share of the loan to their adjusted basis and deduct operating losses to the extent of the basis. Court holdings: U.S Court of Appeals affirmed the Tax Court decision, concluding that shareholders’ basis in stock wasn’t increased by personal guarantees given as collateral and proportionate shares of NOL was limited to initial investment. Analysis and Discussion: To increase the basis in the stock of an S corporation, there must be an economic outlay on the part of the shareholder. A guarantee itself cannot fulfill that requirement. VAFLA made all the payments to the bank and the appellants have not experienced no cost and thus no economic outlay. If VAFLA had defaulted and the shareholder-guarantors made actual disbursements on the...
Words: 317 - Pages: 2
...Gearing = 280/780 X 100 = 35.9% ROCE = 16/780 x 100 = 2.0% Stock turnover = 137/64 = 2.14 or 170 days Gross profit = 53.6% Current ratio = 0.88:1 Out and About have a very low gearing ratio, of only 35.9%. A gearing ratio of 35.9% means that for every 100 pounds invested in this firm, only £35.90 is borrowed money. This could result in the potential for further borrowing because the ratio is very low. The higher the level of borrowing, the higher the risks to a business, since the payment interest and repayment of debts are not optional in the same way as dividends. The ratio indicates that a significant proportion of the 14 million could be borrowed, as Out and About seem to be a well-established business that would be financially stable to finance its activities using debt. Out and About plc could raise their capital because the gearing uses long-term debt, which is normally cheap, and reduces the amount that shareholders have to interest in the business. An advantage is that it will reduce interest payments, so more investment can occur elsewhere and the firm can have more cash flow to take on bigger and potentially more profitable projects. This would be helpful in the consideration of extending and diversifying their business. However, the poor profitability and liquidity problems could deter potential creditors. The current ratio is 0.87:1 and the acid test is 0.47:1. This shows significant liquidity problems, which further relates to the...
Words: 740 - Pages: 3
...What are the major reQ1 a) Why would many Cityvision stockholder sell for cash rather thanBlockbuster stock? Ans. Many Cityvision stockholder sell for cash rather than Blockbuster stock because – In cash transaction acquiring shareholders take all the risk that theexpected synergy value embedded in the acquisition premium will notmaterialize, where as when we deal is stock the risk is spread andshared with the acquired shareholders too.In a cash deal it is pretty clear who is acquirer and who is acquired,when it comes to stocks and the stock value can change at any time.A really confident acquirer will tend to pay for the acquisition by cashand the markets historically have been rewarding this confidence byresponding through rise in share value, a stock buy out could (almostcertainly) take the opposite direction if they sense that the stock isovervalued. In about 75% of the cases, the stock value of acquirer hastaken a dip soon after the deal is announced. The cash buyout also makes sure that its shareholders do not give up any merger gains to theacquired companies shareholders.The more sensitive the acquired companies compensation is tochanges in acquirer’s stock, the less favorable the response from themarket. There are many tools and frameworks that one can use toarrive at the SVAR (Shareholder value at risk) and then make adecision on the best mode.In conclusion I would say that this is not an easy decision , there areseveral macroeconomic factors that drive this...
Words: 576 - Pages: 3
...Letter JOANN CHUNG NO.88 New York St., Cubao, Quezon City Dear Madame J. CHUNG; This demand letter has relation to our client’s Mr. Edison De La Cruz cause of action /claim on his share in the profits of the Laundry business in Cubao Quezon City and in Project 4, Quezon City, as well as the refund of his payments of rentals over the leased premises located at No. 88 New York Street Cubao Quezon City . Accordingly , you and our client had a laundry business and agreed to share alike in the profits of the said business which is still operational in its business site at No. 88 New York Cubao Quezon City. But since April 2009 to November 2013, you have refused to give to Mr. Edison His lawful share in the profits of the business in New York St. Cubao, which is at Ten Thousand Pesos ( P/10,000. ) a month. The total amount has accumulated and is now P410, 000. Our client has also paid the monthly rentals on the businesses premises (Cubao ) at P/15, 000 month from April 2009 to July 2010 in the total amount of P/ 345,000 without you having reimbursed to our client the said paid amount . Further, you and our client had another Laundry Business at No. 8 Castillo , Bagumbahay , Project 4, Quezon City and accordingly, you have not given to him his share in the profits at ten thousand pesos a month starting from March 6, 2006 to Nov. 2013 for a total amount of P1,080,000. .Lastly , you required our client to pay for the repairs of a...
Words: 557 - Pages: 3
...For around 25 shares of Re 1 of CBoP, an investor will get one share of Rs 10 of HDFC Bank. In last two days, share price of CBoP moved from Rs 49.85 on Wednesday to Rs 56.40 on Friday. However, it seems, investors of HDFC Bank did not like the development. The share price of HDFC Bank on Thursday moved up from Rs 1,534.50 to Rs 1,543. But on Friday, it fell sharply to Rs 1,475. Prior to this, in August 2007, CBoP was merged with Lord Krishna Bank. * 2008 HDFC Bank acquired Centurion Bank of Punjab. The swap ratio is expected to be around 1:25-30,” said a banking source. The merger will make HDFC Bank the country’s seventh largest bank after Bank of India (BoI) and ahead of IDBI Bank, from the current 10th position. The merger talks between the two banks began in January 2008 after the principal shareholders of CBoP – Bank Muscat with 14.02 per cent stake, Sabre Capital with 3.48 per cent stake and Kephinance Investment (Mauritius) with 6.13 per cent — decided to exit. 1) HDFC Bank Board on 25th February 2008 approved the acquisition of Centurion Bank of Punjab (CBoP) for Rs 9,510 crore. BENEFITS FROM THIS DEAL * The HDFC Bank, which currently spans India with its chain of 746 branches, will add to itself 394 branches of the CBoP to itself, to make its network bigger and stronger. The merger talks between the two banks began in January 2008, after the principal shareholders of CBoP – Bank Muscat with 14.02 per cent stake, Sabre Capital with 3.48 per cent...
Words: 948 - Pages: 4
...1956, "a managing director means a director who, by virtue of an agreement with the company or of a resolution passed by the company in a general meeting or by its board of directors or, by virtue of its Memorandum or Articles of Association, is entrusted with substantial powers of management, which would not otherwise be exercisable by him, and includes a director occupying the position of a managing director, by whatever name called." Shareholder and member: The word 'shareholder' is used in relation to a company having a share capital and there can be no membership except through the medium of shareholding. A holder of shares becomes a member only when his name is entered on the register of members. But the term 'member' is wider in scope and may be used in relation to all types of company. A person may become a member of a company without holding any share. Companies limited by guarantee or unlimited companies which may not have share capital, and therefore can have no shareholders but they do have members. 163 6.13 SELF ASSESSMENT QUESTIONS 1. "Members includes shareholder while shareholder does not include member". Comment. 2. Who may become a member of a company? How to become member of a company ? What are the ways of cessation of membership? Discuss in detail. 3. How and what way are the directors of a company are appointed ? 4. Who are the persons who may not be appointed as directors? Can central government remove their disqualifications? 6.14...
Words: 397 - Pages: 2
...A stock is selling today for $40 per share. At the end of the year, it pays a dividend of $4 per share and sells for $48. a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? Initial selling price 40 Dividend 4 Selling price of stock after dividend 48 a. Total rate of return 30.00% b. Dividend Yield 10.00% % capital gain 20.00% You purchase 100 shares of stock for $50 a share. The stock pays a $2 per share dividend at year-end. What is the rate of return on your investment for the end-of-year stock prices listed below? What is your real (inflation-adjusted) rate of return? Assume an inflation rate of 3%. Purchase value 100 shares 50 Rate of Return Real Rate of Return Dividend at end of year 2 a. 48 0% -2.91% Inflation 0.03 50 4% 0.97% 54 12% 8.74% Value to cover inflation part a 51.5 Ending value part a 50 ending value part b 52 Ending value part c 56 Here are stock market and Treasury bill percentage returns between 2006 and 2010: Year Stock market return T-bill return 2006 17.27 6.3 10.97 7.1040 50 2007 7.41 6.06 1.35 -2.5160 6.33 2008 -38.83 1.8 -40.63 -44.4960 1980 2009 29.7 0.9 28.8 24.9340 622 2010 19.36 0.52 18.84 14.9740 224 2883 a. What was the risk premium on common stock in each year? Year...
Words: 464 - Pages: 2
...even lower now than it was a year ago. Its net debt (total debt minus cash on hand) at the end of its last quarter was $345.10 million, a fraction of its $989.60 million in EBITDA. This ratio fell by an impressive 114.42% from the year earlier period, when EBITDA was $789.80 million. This situation affords the company many attractive options such as pursuing acquisitions without incurring much debt or rewarding shareholders through dividends or the repurchase of common shares, which would make future earnings more valuable. Despite this reduction in net debt, the company's total debt as a percentage of total capital actually increased over the same twelve month period, while its cash on hand fell. In its last quarter total debt accounted for 29.53% of total capital compared to 9.61% in the year earlier quarter while cash on hand fell from $2.46 billion to $1.70 billion, a 30.77% drop. This suggests Starbucks Corporation has been using its cash reserves to pursue strategic purposes such as aquisitions or share repurshases rather than debt reduction, which isn't necessarily a bad option as long as such moves contribute to future growth instead of constraining the company's...
Words: 299 - Pages: 2
...government could only legislate on companies if they were already formed, due to the way the Federal government’s constitutional power was interpreted by the High Court. Types and classes of companies, shares 7. Answer: c. A is wrong (pty co’s cannot meet the shareholder/size requirements for ASX listing). B is wrong, because it requires qualification. D is wrong, because they would need to convert to a public company first. 8. Answer: b, Listing Rule 10 requires listed companies to obtain shareholder approval of transactions with a person of influence, eg directors. 9. Answer: e. It is not just (a), because you’re asked what the difference is between the two – so you need to identify the correct characteristics of each one. (b) and (c) are therefore also incorrect, although (c) is the standout characteristic I was trying to get you to identify. The correct answer is (e). Previous iterations of this answer guide said that (c) was the correct answer although I changed the options around in the question and did not change the answer guide. Apologies for any confusion. 10. Answer: b, company A is presently a subsidiary of company B because company B is ‘in a position to cast more than half the maximum number of votes.’ 11. Answer: c. The company may redeem the shares at the end of a fixed period. 12....
Words: 715 - Pages: 3
...the more money involved the more your interests will be protected. You are right in the sense that if its your own money on the line you're going to proactively be vigilant in making that company a sucess. I believe most companies were you have the board of directors all have large stakes in the company will be better run and managed as they are not going to want to see the company fail when their own money is on the line. Any company that has leaders that don't have large holdings in the company or frequently sell or cash in on their shares and options you know it might not be a good company to invest in when the people running it wont even invest their own money in it either. I think its about common sense and doing your research. I believe on the whole the people who have the most money invested in a company to have the biggest say in what happens and their interests are met and they do have a lot of influence. How many of us have shares in a company yet we don't exercise any of our voting rights or go to the AGM or any conferences? Do we give feedback to the company with ideas and suggestions for future growth and...
Words: 322 - Pages: 2
