...Team Group 35 Zimi Surana Shriram Singaravelu Sheetal Sehgal Girish Swaminathan Ashish Khandelwal Arpan Goyal PGP-14-239 PGP-14-222 PGP-14-219 PGP-14-243 PGP-14-177 PGP-14-175 Through their financial statements…Let me show you how… FINANCIAL HEALTH OF THE COMPANIES Increasing PAT & Sales Revenue for both the companies. Retirement of secured loan by both the companies. ₹ 90,926 Million (2014) Sales Revenue 8% ₹ 84576 Million (2013) ₹ 73780 Million (2014) Total Cost 7% ₹ 68783 Million (2013) ₹ 15008 Million (2014) PAT 3% ₹ 14598 Million (2013) Financial Highlights of B/S Sales 133% Investments Revenue ₹ 63548 Million (2014) 12% ₹ 56811 Million (2013) ₹ 58066 Million (2014) Highlights of B/S 33% Investments 216% Cash Total Cost 9% ₹ 53111 Million (2013) ₹ 3654 Million (2014) 30% Receivables Secured Loan -15% PAT Secured Loan 53% ₹ 2393 Million (2013) -100% CASH FLOW ANALYSIS Britannia is concentrating more on investment than Nestle. ₹ 17964 Million (2014) Operating Activities 6% ₹ 16933 Million (2013) ₹ (9408) Million (2013) Decrease in cash outflow from Investing activities company is investing less Less expansion plans ₹ 6145 Million (2014) Operating Activities 126% ₹ 2720 Million (2013) ₹ -2273 Million (2014) Investing 522% Activities ₹ 539 Million (2013) ₹ (3591) Million (2013) Increase in cash outflow from Investing activities company is investing more More expansion plans High future growth Increase in...
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...Ratings And Off-Balance Sheet Operating Leases Question #1 How should the operating lease be treated in the assessment of quality of firm’s bonds? Answer A rating agency assigns a bond to a rating category. The standard and poor’s publishes an internet version of Corporate Ratings Criteria. The process is based on an analytical framework that considers both qualitative and quantitative issues. The process begins by assessing the issuer’s competitive position and operating environment and then using the company’s business risk profile to determine the level of financial risk appropriate for any rating category. Financial risk is basically assessed financial ratios and these ratios are used to assess, a company’s profitability, interest coverage, leverages and cash flow adequacy. Before analyzing ratios, a general assessment of the accountability quality of the financial statements is conducted. A number of accounting issues reviewed such as the off-balance sheet liabilities such as operating leases. Adjustments for it are made to ensure that the companies are comparable. The adjustment for lease is especially important in the airline industry because it is typically leased rather than purchased. S&P capitalizes all operating leases in the computation of the financial ratios to make companies that buy all of their operating leases more comparable to those that lease part of all these assets. The rating agency have to convert operating leases into...
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...iii. Assets turnover…………………………………………………………… 8 iv. Turn on assets……………………………………………………………. 8 v. Return on ordinary shareholders’ equity…………………………………9 vi. Earning per share…………………………………………………………10 2.3 Efficiency Ratio……………………………………………………………….10 i. Debtors’ turnover…………………………………………………………...10 ii. Average days’ sale uncollected……………………………………………11 iii. Inventory turnover……………………………………………………….....11 iv. Inventory turnover in days………………………………………………. 12 2.4 Long-term Solvency Ratio…………………………………………………. 13 i. Debt to equity……………………………………………………………… 13 ii. Debt to Assets…………………………………………………………….. 14 iii. Leverage Ratio…………………………………………………………… 14 iv. Interest coverage………………………………………………………….15 3. Conclusion…………………………………………………………………………. 15 4. Recommendation…………………………………………………………………. 15 5. Appendices………………………………………………………………………… 18 6. Reference………………………………………………………………………….. 21 Executive Summary This report is written by an accountant. As an accountant in a firm of accountants which specializes in...
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...หลังจากการควบรวมกันเป็นบริษัท Diageo ต้องการจะเน้นไปที่เครื่องดื่มแอลกอฮอล์เพียงอย่างเดียว จึงตัดสินใจที่จะขายธุรกิจอาหารไป ได้แก่ Pillsbury โดยขายให้กับ General Mills และต้องการจะออกจากธุรกิจ fast food โดยการออกขายหุ้น IPO ของ Burger King นอกจากนี้ บริษัท Diageo ยังเข้าซื้อกิจการประเภทแอลกอฮอล์ ได้แก่ Seagrams ทำให้บริษัทขยายใหญ่ขึ้นและมีความแข็งแกร่งทางด้านธุรกิจแอลกอฮอล์ ก่อนที่จะมีการควบรวมกิจการนั้น Guinness กับ Grand Metropolitan มี rating อยู่ที่ AA และ A ตามลำดับ แต่พอหลังการควบรวมกิจการเป็นบริษัท Diageo ทำให้มีถูกลด rating เหลือเพียง BBB โดยRating Agencies ได้แก่ Standard and Poor’s และ Moody’s เนื่องจากเกิดความไม่แน่นอนของนโยบายทางการเงินของบริษัท บริษัท Diageo จึงต้องควบคุม Capital Structure ให้มีประสิทธิภาพ โดยการรักษาระดับของ interest cover ratio ไว้ 5-8 เท่า และคงระดับของ EBITDA/Total Debt ให้อยู่ที่ 30% - 35%ถ้าบริษัท Diageo ต้องการรักษา rating ให้อยู่ที่ระดับ A+ นอกจากนี้บริษัทจะต้องใช้นโยบาย Trade-off Theory ซึ่งเป็นการเลือกระหว่างความเสี่ยงและผลตอบแทน กล่าวคือบริษัท Diageo ต้องเลือกระหว่างต้นทุนความล้มเหลวทางเงิน (Financial Distress)และผลประโยชน์ทางภาษี (Tax Shield) โดยสามารถคำนวณจากผลประโยชน์ทางภาษีในแต่ละปีและการประเมินความน่าจะเป็นที่จะเกิดความล้มเหลวทางการเงิน บริษัทมีการใช้ Monte Carlo Analysis ซึ่งใช้การวิเคราะห์แก้ปัญหาที่ยากหรือไม่สามารถแก้ปัญหาได้ เช่น การคาดการณ์การเปลี่ยนแปลงของดอกเบี้ยและอัตราแลกเปลี่ยนในอนาคต ประเมินความเสี่ยงจากการล้มละลาย และการแสเงินสดในการดำเนินงาน เป็นต้น ซึ่งจะเป็นใช้สถิติมาช่วยในการวิเคราะห์ โดย Simpson และ Williams ใช้...
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...9 89,254 73543 29.8 56659 EBITDA (excl. pre-operating expenses) 52,043 53. 3 33513 26669 32.6 20117 Operating margin 36.2% 37.5% 36.3% 35.5% Property cost -15,352 38.2 -11,112 -9513 29.9 -7322 EBITDA 36,691 63.8 22,401 17156 34.1 12795 The total revenue attributed to family entertainment centres grew in in 2015 resulting in a 63.8 percent growth in EBITDA. This growth was due to success in the constant centres and the performance of new centres that had been opened during fiscal year 2015. The growth in revenue attributed to constant centres was due to the introduction of a new core food menu, remodelling and an influx on the contribution of amusement games. Customer expenditure was driven by the growth in league events (for corporates and groups) and an increase in value based promotion. In 2013, the total revenue grew by 29.8 percent due to new development and improved performance by the constant centres. Revenue attributed to constant centres increased by 4.5 percent due to an influx of customer expenditure on value-based limited time promotions, amusement games and an improvement of the range of food and beverage offed at the centres. The margins continued to grow due to growth...
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...Debt Policy at UST Case Questions Group members: Wei-Ting Liao; Cong Ren; Gerald Nyiti; Beidan Wang 1- ) Give a brief summary of the company background UST Inc. is a smokeless tobacco company which enjoyed a long tradition and a recognizable brand name. It is the leading producer of moist smokeless tobacco products and widely known for its conservative debt policy and uninterrupted cash dividend payout since 1912. The company is the major player in U.S. smokeless tobacco market. For example, it holds the maximum market share (77%) as a whole, and dominates especially in the growing segment of moist smokeless tobacco. Additionally, it has widely recognized brand and competitive positon in the market by constant innovation and new product innovation. Finally, UST has historically been one of the most profitable companies not only in the smokeless tobacco market but also in the corporate America. Although the above advantages, UST now faces with continuous threat from price-value competitors, a softening smokeless tobacco market, investors’ concern about over-investment on non-core operations and negative effect of public and political sentiment towards the tobacco industry. 2- ) Evaluate UST’s attributes/Risks from view point of bondholder The following factors weave into the risks and attributes of the company from the creditors’ point of view (“” and “” represents advantage and disadvantage, respectively): Widely recognizable brand Name UST has widely recognized...
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...Contents Objectives 1 Management Summary 2 Item 1 2 Sub 1.1 2 Sub 1.2 2 Conclusion 2 Item 2 2 Sub 2.1 2 Conclusion 2 Item 3 2 Sub 3.1 2 Sub 3.2 2 Conclusion 2 Item 4 2 Item 5 2 Appendices 2 i. Objectives This report seeks to answer the following five questions about William Wrigley Jr.: 1. In the abstract, what is Blanka Dobrynin hoping to accomplish through her active-investor strategy? 2. What will be the effects of issuing $3 billion of new debt and using the proceeds either to pay a dividend or to repurchase shares on: a. Wrigley’s outstanding shares? b. Wrigley’s book value of equity? c. The price per share of Wrigley stock? d. Earnings per share? e. Debt interest coverage ratios and financial flexibility? f. Voting control by the Wrigley family? 3. What is Wrigley’s current (pre-re-capitalization) weighted-average cost of capital (WACC)? 4. What would you expect to happen to Wrigley’s WACC if it issued $3 billion in debt and used the proceeds to pay a dividend or to repurchase shares? 5. Should Blanka Dobrynin try to convince Wrigley’s directors to undertake the recapitalization? Management Summary Active Investor Strategy Blanka Dobrynin is a managing partner of the Aurora Borealis Company. The company utilizes a strategy called “Active Investor”. In this strategy, the firm looks for companies that could benefit from restructuring. Aurora Borealis then invests heavily in...
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...Contents Objectives 1 Management Summary 2 Item 1 2 Sub 1.1 2 Sub 1.2 2 Conclusion 2 Item 2 2 Sub 2.1 2 Conclusion 2 Item 3 2 Sub 3.1 2 Sub 3.2 2 Conclusion 2 Item 4 2 Item 5 2 Appendices 2 i. Objectives This report seeks to answer the following five questions about William Wrigley Jr.: 1. In the abstract, what is Blanka Dobrynin hoping to accomplish through her active-investor strategy? 2. What will be the effects of issuing $3 billion of new debt and using the proceeds either to pay a dividend or to repurchase shares on: a. Wrigley’s outstanding shares? b. Wrigley’s book value of equity? c. The price per share of Wrigley stock? d. Earnings per share? e. Debt interest coverage ratios and financial flexibility? f. Voting control by the Wrigley family? 3. What is Wrigley’s current (pre-re-capitalization) weighted-average cost of capital (WACC)? 4. What would you expect to happen to Wrigley’s WACC if it issued $3 billion in debt and used the proceeds to pay a dividend or to repurchase shares? 5. Should Blanka Dobrynin try to convince Wrigley’s directors to undertake the recapitalization? Management Summary Active Investor Strategy Blanka Dobrynin is a managing partner of the Aurora Borealis Company. The company utilizes a strategy called “Active Investor”. In this strategy, the firm looks for companies that could benefit from restructuring. Aurora Borealis then invests heavily in...
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...TABLE OF CONTENTS EXECUTIVE SUMMARY……………………………………………………………………………………………………………………….1 COMPANY PROFILE & BUSINESS STRATEGY………………………………………………………………………………………2 AGTHIA GROUP…………………………………………………………………………………………………………………….2 PARMALAT GROUP……………………………………………………………………………………………………………….3 FINANCIAL ANALYSIS…………………………………………………………………………………………………………………………3 DEGREE OF OPERATING LEVERAGE………………………………………………………………………………………………….12 DEGREE OF FINANCIAL LEVERAGE……………………………………………………………………………………………………12 PROFORMA INCOME STATEMENT…………………………………………………………………………………………………..13 AGTHIA GROUP…………………………………………………………………………………………………………………..13 PARMALAT GROUP……………………………………………………………………………………………………………..14 INVESTOR RECOMMENDATION……………………………………………………………………………………………………….15 CONCLUSION……………………………………………………………………………………………………………………………………16 LIST OF REFERENCES…………………………………………………………………………………………………………………….....17 APPENDICES………………………………………………………………………………………………………………………………………… Executive Summary The assignment involves the four year analysis of two companies i.e. the Parmalat Group and the Agthia Group. The former is an Italian food & beverage company specialising in the production of dairy products. The latter is a UAE based company and is responsible for products such as Capri Sun, Al Ain Mineral Water etc. The report ahead will deal with ratio analysis of the both companies and will also look into the performance of the companies and provide a recommendation to investors with regards to the shareholdings in each company...
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...315,680 Fixed asset turnover = 1.63 times 8. Total asset turnover = sales/total assets Total asset turnover = $20,077,000 / $15,453,900 Total asset turnover = 1.30 times Liquidity Ratios 9. Current Ratio = current assets/current liabilities Current ratio = $3,138,220 / $2,162,080 Current ratio = 1.45 times 10. Quick Ratio = current assets – inventory/current liabilities Quick ratio = ($3,138,220 – 1,238,500) / $2,162,080 Quick ratio = 0.88 times Debt Utilization Ratios 11. Debt to total assets = total debt/total assets Debt to total assets = ($2,162,080 + $3,825,000) / $15,453,900 Debt to total assets = 0.39 or 39% 12. Times interest earned = income before interest and taxes/interest Times interest earned = $2,038,000 / $362,000 Times interest earned =...
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...dollars in the aggregate for [physician assistants] PAs and [nurse practitioners] NPs” (Paterick, 2014, p. 310). PAs are at constant risk of liability; therefore, it is crucial to understand the importance of having a personal malpractice insurance and the different types of policies available. NPC’s work in collaboration with supervising physicians to evaluate and treat patients. Unfortunately, when mistakes occur and a patient is harmed, both the physician and the PA may be liable for actions or errors of others. Controversy exists “regarding how PAs' malpractice litigation risk compares with that of physicians and to what extent doctors' risk of malpractice litigation is affected by supervising PAs” (Ledges, Victoroff & Ginde, 2011, p. 35). The liability that a party holds for the actions or conduct of an associate based on the relationship of two parties is known as vicarious liability (Moses & Jones, 2011). Due to...
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...Prepare a pro-forma income statement to analyze whether UST will be able to make interest payments. c. For the basic analysis, assume the $1 billion in new debt is constant and perpetual. Should UST alter the new debt via a different level or a change in the amount of debt through time. (50 marks) UST should undertake the $1 billion recapitalization. Valuation Impact of recapitalization (in millions, except per-share data and ratios) Status Quo (12/31/1998) $1 billion Recap Plan PV Tax Shields 0 38% Market Value of UST $6470.8 $6646.6 Net Debt 0 $1,000.0 Stock price $34.88 $42.38 Shares repurchased NA 4346330 Shares outstanding 185,516,055 156847330 Market value of Equity $6470.8 $6646.6 Debt/Equity ratio 0 0.15 Market value of UST(status quo) It was given that UST has no debt and PV of tax shield is given as zero, so the market value of UST is equal to its market value of equity before recapitalization, which was given as 185,516,055. Assume 38% tax rate Market value of UST = market value of debt + market value of equity Therefore, Value of status quo = $0 + 6470.8 = $6470.8millions Market value of UST(after recap)= market value of UST equity before recap + interest tax shield of debt. = 6470.8(million) + 175,826,000 = 6646.6(million) Market value of equity= dividends/ cost of equity (K(e)=5.2% in 1999, dividends = 301.0 Tax shield of debt= [ (income – ( debt x interest rate) } x tax rate =( (467.9-(100.0 x 5.2) ) x 38% = 175,826,000 Stock price...
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...Term Papers and Free Essays Browse Essays 1. What are the primary business risks associated with UST Inc.? What are the attributes of UST Inc.? Evaluate from the viewpoint of a bondholder. (Your answer should be more qualitative than quantitative!) The following factors weave into the risks and attributes of the company from the creditors’ point of view: A. UST had seven pending health related lawsuits at the end of 1998. The outcomes of these suits are uncertain. Despite the major Medicaid state settlements, lawmakers are expected to continue to push for new laws to combat youth tobacco use. Other litigation against tobacco companies is expected to continue, especially suits filed by individuals. This uncertain litigation and legislative environment makes the future cash flows of UST risky B. UST is a dominant player and market leader and its strategy is to combat entrants by launching similar products, rather than cutting prices. But the recent market erosion by small companies has raised concerns. And UST’s “counter attack” has not been effective in competing against price-value brands. The resignation of his CFO and President of tobacco unit further raise the uncertainty of the company’s efficiency of solving the market erosion problem. C. The previous uncertainty is enhanced by a lawsuit that alleged that UST had violated antitrust and advertising laws and participated in anti-competitive conduct. Should UST lost...
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...if the entity liable fails to perform. Rite-Aid's wholly owned subsidiaries guarantee the debt. iii. Senior denotes the debt holders that have the highest rights of priority if a firm falls into bankruptcy. Fixed-rate is the term the means the interest rate remains constant over the term of the debt. Convertible is a type of bond that allows the holder to exchange the bond for common stock under certain conditions. iv. To finance the assets of the firm, corporations have to diversify their debt. Firms cannot realistically attach all debts to assets and the risk profile can vary significantly between secured and unsecured debt. Establishing credit worthiness is an the unsecured debt market is another key component of financing the business. Process B. Total debt on Feb 27, 2010 = $6,370,899,000. $51,502,000 is due within the coming fiscal year. On the B/S, LTD = $6,185,633,000 Lease financing obligations = $133,764,000, and current maturities of LTD and lease financing obligations = $51,502,000. The sum of these three accounts equals the total debt. c. i. $500,000. It was issued at par since there is no change between 2009 and 2010 ii. Dr Cash $500,000 Cr Bonds Payable $500,000 Iii. Dr Interest Expense $37,500 Cr Cash $37,500 iv. Dr Bonds Payable $500,000 Cr Cash $500,000 d. i. The face value of the notes is $410,000,000. The carrying value of these notes on Feb 27, 2010 is $405,951,000....
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...Debt Policy at UST Inc. Executive Summary In the 1990’s, UST was a dominant producer of moist smokeless tobacco, controlling 77% of the market. Smokeless tobacco products consist of snuff (dry and moist) and chewing tobacco (loose leaf, plug and twist/roll) categories. UST was a market leader of the snuff product category, innovating with new product forms and flavors over the years. UST has also been a profitable company, boosting its shareholders’ earnings by undertaking measures such as increasing the cost of its products steadily with time. UST also benefited from the steady increase in market demand for smokeless tobacco given the rising restrictions on cigarette second hand smoke. UST was still criticized at the time for its tardiness with new product introductions and losing its market share to new and smaller competitors. In 1997, instead of cutting product prices to compete, UST introduced new line of lower priced products such as Copenhagen Long Cut and Rooster. UST also renewed its focus on the marketing campaigns, launching promotions and increasing couponing. For years, tobacco industry had been embattled with health related lawsuits. Majority of these litigations were for cigarette companies in comparison to smokeless tobacco industry. Still, UST had seven pending health related lawsuits. UST has historically been one of the most profitable companies in corporate America. Even though S&P rated the debt of many tobacco companies as investment grade...
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