...1-310-919-0950 Hi rlaughter1981 StudyMode.com Essays Book Notes AP Notes More Essays » Chemistry Dupont Case By tweaklefairy, Feb 2009 | 9 Pages (2,231 Words) | 1641 Views | 12345 Report | This is a Premium essay for members like you Executive Summary DuPont has been known for its low reliance on borrowings. In the 1970’s, the company had to assume a substantial portion of debt of Conoco, a newly acquired company. In 1983, the managers have to decide about the future optimal target debt ratio. Should the company continue to keep about 40% of its assets financed via debt or should it strive to lower its borrowings to 25%? We defined several criteria to determine our choice – return, risks and other quantitative and qualitative factors. Targeting a debt ratio of 40% will maximize the firm’s value. A higher earning’s per share and dividends per share will lead to a higher stock price in the future. Due to leveraging, return on equity is higher because debt is the major source of financing capital expenditures. To maintain the 40% debt ratio, no equity issues will be declared until 1985. DuPont will be financing the needed funds by debt. For 1986 onwards, minimum equity funds will be issued. It will be timed to take advantage of favorable market condition. The rest of the financing required will be acquired by issuing debt. Case Context DuPont is a very big company with a low debt policy designed to maximize financial flexibility and insulate operations...
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...GROUP - 1 GROUP - 1 Du Pont- Conoco IPO Carve Out and Split Off Case Analysis Du Pont- Conoco IPO Carve Out and Split Off Case Analysis SUMMARY E.I. du Pont de Nemours and Company, global leader in the technological innovation in business and the fifteenth largest company in the US in 1999, decided to divest its subsidiary Conoco, major and integrated oil and energy company, previously acquired through an M&A deal of $7.8 billion. In fact DuPont decided to move the company from its traditional energy and chemical businesses towards life science (agriculture, biotechnology, pharmaceutical) in a major operation of refocus on the core business. What became clear to DuPont shareholders was that they were not benefiting from being either a special chemical company, life science company or oil company: the price-earning multiple of the entire company was less than any of its representative sectors. Initially, the strategy of the new CEO was to increase share price through the division of the company in three sectors, of which life science represented the one most heavily funded. However, while company share price was predicted to rise to $90, it fell to $60. For these reasons it was opted for a divestiture through a split-off: DuPont would allow to trade each DuPont stock for 2.95 Conoco stocks, up to a total of 148 million DuPont shares. Once the deal was announced, DuPont shares soared 11% at an all-time high of $79.50 per share The strategy would have been...
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...Change at DuPont The case of Change at DuPont did not involve a particular problematic scenario. Change was constant at the plant and it was part of doing business hence the lack of change management as a rubric. More change was anticipated regardless of any formal change management practices. In order to guide the anticipated changes, the plant manager, Tom, was seeking new business insights from the academic community. Tom’s main focus was to educate managers on new ideas to apply them for further development and expansion of the plant. Furthermore, Tom was not looking for assistance in solving particular problems at the plant but was interested in improving the plant’s overall efficiency as he was under pressure to deliver results. 1. Using specific examples from the story, describe the extent to which each of the three approaches to change are evident in the DuPont case. a. OD The OD approach is quite evident in the DuPont case with the exception of the post-action data gathering and evaluation step. Tom, the plant manager, realized the need to improve the organizational effectiveness and consulted a university professor, Gib Akin, to shed new light on his business operations. Gib took the initiative for collecting the data by physically attending the plant and interviewing employees and managers. In addition, Gib advised leadership on how to introduce change to their employees. Managers and supervisors were advised on what actions they need to take, for example as Palmer...
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...ACC 519 Case Note Target vs. WalMart Purpose: The purpose of this case is to illustrate a comprehensive financial statement analysis which applies the concepts of strategy analysis, ratio analysis and valuation in the context of two competing businesses. This case will demonstrate how corporate strategy is reflected in financial statements and ratios, and will require you to compare performance over time and against a competitor. In addition, this case will help you to see how different operating and financing strategies will affect ratios. Your primary sources of information in this case should be the most recent 10-K’s issued by the two companies (TGT, filed 3.15.2012; WMT, filed 3.27.12). Case Questions: 1. What is the generic strategy for each of the two companies? 2. What is each company’s source of competitive advantage, and what will be important to maintaining that advantage? 3. How do their business models differ? For purposes of this question you should consider the following: a. Composition of the business from a segment perspective b. Composition of sales - % of sales in various categories c. Financing of the assets used in the business 4. From an accounting analysis perspective, are there any major differences between the two companies? 5. Calculate the following ratios for both companies for the years ended January 2012 and 2011 (Please note that the two companies refer to their fiscal years in different ways): d. ROE...
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...conduct analysis of each company based on the DuPont Method. In addition, I will also look at how changes in accounting methods affected Seven and I holdings’ results in 2013 when compared to 2012. Finally, I will conclude my analysis on how comparable it was under different accounting methods based on above analysis. _____ Three Companies Chosen for Analysis For this ratio analysis assignment, I chose three companies from the UK, US and Japan: Walmart Country: US Industry: Supermarket Retail Accounting Standard: GAAP TESCO Country: UK Industry: Supermarket Retail Accounting Standard: IFRS Seven and I Holdings Country: Japan Industry: Supermarket Retail Accounting Standard: Japan Standard _____ Change/Amendments in Accounting Methods Walmart Even though there is a mention about recent accounting pronouncements and future adoption of those policies, there is and will be no effect in the firm’s net income, financial position or cash flows. Sainsbury Although there were two amendments effective from this annual reports, the firm has concluded that it doesn’t have a significant impact on the financial statements apart from additional disclosures. Seven and I Holdings Due to change in Corporate Tax Law, there was a change in depreciation methods for the long-term intangible assets obtained after 1st April, 2012. Because of this, there was an increase of 2,764mil yen in net income. On a side note, the increase in profit compared...
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...FI561- Mergers and Acquisitions Week 5 Case Study: DuPont Divestiture of Conoco November 27, 2011 . Abstract In this paper, we are examining the 1998 DuPont spin off of Conoco by analyzing the transaction itself. Then, I look at one of the possible alternatives to the chosen transaction and compare that alternative with the actual long term impacts of the sale. I will then decide and recommend which option would have been the best utilized by DuPont over the long-term in order to generate the most revenue from its ownership of Conoco. DuPont purchased Conoco in 1981 and it was the largest merger in corporate history at that time. The purchase gave DuPont a secure source of petroleum feedstocks needed for many of its fiber and plastics operations. Conoco also manufactured profitable commercial petroleum products and coal, produced by the wholly owned subsidiary Consolidated Coal Company. (“DuPont” 2011) Introduction Over the last several years, corporate America has often turned to spin offs as a way to increase their bottom line numbers. This has proven to be an effective tool in helping a firm to both divest itself of an unprofitable division and to raise large amounts of new investment capital. This money can be used to help repurchase stocks or make strategic acquisitions that will allow the firm to adapt with the changes that occur within their market place and allow it to continue to compete within that marketplace. Additionally, after such an event...
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...Mergers and Acquisitions You Decided #2 June 7,2015 FIN 561 The primary purpose of a corporation is to make a profit through continuous operations. After establishing itself the company must maintain current operations, expand, and endure other changes in order to avoid extinction and stay relevant in the market in which they operate. In this paper I will analyze the reasoning behind the 1981 purchase of Conoco by DuPont which at the time was the largest takeover in U.S. history with a 1981 value of 7$ billion (Rubank,1982). I will also analyze the financial effects of the takeover on both firms. In conclusion there will be review of the information that supports a two-stage divestiture of Conoco. Corporations do not often make decision on a whim and often have months or maybe years of evidence and findings to back up significant business ventures. The use of a divesture as a restructuring method is a decision made by a corporation for many reasons. These reasons can include the firm having a subsidy that is not profitable. Another reason is that it want to let go of an element that is not in line with its core operations or mission. The funds that would result from a sell-off of the unit is also a huge motivator. These funds could be used to expand the core operations. DuPont’s takeover of Conoco did not start from one initial offer to buy a majority share of the firm. In May 1981 Conoco was taken over by Dome Petroleum Ltd. Management...
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...http://is.lse.ac.uk/ © the author 2006 The Feeny-Willcocks Governance Framework Revisited: Implementing Core IS Capabilities Leslie Willcocks London School of Economics Willcockslp@aol.com David Feeny Templeton College, Oxford David.Feeny@templeton.ox.ac.uk Nancy Olson Warwick University Nancyox20@aol.com and Abstract In 1998, Feeny and Willcocks published a core IS capabilities framework suggesting four tasks and nine capabilities for any future IT function. This paper revisits the framework, examining the challenges and learning points from its implementation in two organizations from 1997 to 2005. The contrasting cases, studied longitudinally, involved a medium size organization beginning to outsource, and a global manufacturing company that had 10-year $US 4 billion outsourcing arrangements with two suppliers. Longitudinal case research revealed a range of omissions and resulting problems and underlined the importance of: retaining enough architecture planning and technical doing capability; ensuring future, business–oriented leadership tasks are fully resourced together with succession planning for these; ensuring informed buying and other capabilities to manage external supply and leverage business value from supplier performance are built; and ensuring that operational lynch-pin tasks such as relationship building (to business units) and contract...
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...ROE-DUPONT 1. It is important to remember that equity will not increase by the same percentage as the other assets. If every other item on the income statement and balance sheet increases by 10 percent, the pro forma income statement and balance sheet will look like this: Pro forma income statement Pro forma balance sheet Sales $ 17,600 Assets $ 9,790 Debt $ 5,610 Costs 13,750 Equity 4,180 Net income $ 3,850 Total $ 9,790 Total $ 9,790 In order for the balance sheet to balance, equity must be: Equity = Total liabilities and Equity – Debt Equity = $9,790 – 5,610 Equity = $4,180 Equity increased by: Equity increase = $4,180 – 3,800 Equity increase = $380 Net income is $3,850 but equity only increased by $380. Thus, a dividend of $3,850 – $380 or $3470 must have been paid. Dividends is the plug variable. 2. Here we are given the dividend amount, so dividends is not a plug variable. If the company pays out one-half of its net income as dividends, the pro forma income statement and balance sheet will look like this: Pro forma income statement Pro forma balance sheet Sales $ 17,600 Assets $ 9,790 Debt $ 5,100 Costs 13,750 Equity 5,725 Net income $ 3,850 Total $ 9,790 Total $ 10,825 Dividends $ 1,925 Add. to RE 1,925 Note that the balance sheet does not balance. This is due to EFN which is: EFN = Total assets – Total liabilities and equity EFN = $9,790 – 10,825 ...
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...Executive Summary: On January, 1998, the Senior Executives of DuPont are considering possible divesture of Conoco. Based on financial analysis and economics data analysis, I propose that divest 40% shares and keep the mainly control of Conoco. We believe that divesting Conoco from DuPont will: - permit DuPont to expand its life sciences business, while at the same time allowing Conoco to pursue its investment program in new and capital-intensive oil and gas projects; - facilitate future partnerships, combinations and other arrangements between Conoco and other entities in the oil and gas business; - allow each company to offer incentives to its employees that are more closely linked to its performance; - permit each company to focus its managerial and financial resources on the growth of its business (2) And we also believe that by controlling Conoco, DuPont will: - benefit from the cost of control, promote competitive in other market which need to use crude oil as its raw material. - gain from the increasing price in crude oil in future cause the resources is nonrenewal. Thus, based on financial and economics perspectives, DuPont need to divest 40% of Conoco and keep control the rest of it. Analysis Ladies and gentlemen shareholders, Chairman, Director and Managers, It is a great pleasure to greet you all once again on behalf of the managers of DuPont, and welcome you to our shareholders’ meeting. Today, I have a big decision to announce...
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...This coursework is to be prepared as an individual assignment. Each student is required to answer all questions below using the published information on Rolls-Royce Holdings plc, which is provided as a separate pdf document on Blackboard. The coursework weighting towards the final module mark is 70%. Your work will be marked on the basis of a) the accuracy of your calculations, b) the quality of the analysis provided and, c) the presentation of your report, which must be prepared in a professional manner. The deadline for submission is 12.00pm Tuesday, 07th May 2013. Please use the following guidelines: * The report must be entirely your own piece of work. In particular, the University’s rules on plagiarism must be followed * Your report should not exceed 1,500 words (excluding tables and calculations) * Your report should be word-processed and presented in a professional manner * The font used should be Times New Roman, Size 12, Line Spacing 1.5 Submission guidelines This coursework is to be submitted via Blackboard only. It will automatically be scanned through a text matching system (designed to check for possible plagiarism). * DO NOT attach a CA1 form or any other form of cover sheet * YOU MUST include your name and student ID on the first page of your assignment To submit your assignment * Log on to Blackboard at http://learning.westminster.ac.uk * Go to the relevant module Blackboard site * Click on the ‘Submit Coursework’...
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... Overview • Case Summary • Problem Identification • Findings • Methodology • Metrics • Insights Case Summary • Clarkson Lumber Company [‘CLC’], is a small PNW lumber concern experiencing rapid, questionably financed growth. • Keith Clarkson [‘Clarkson’], sole owner of CLC, has maxed out ($399K of $400K) his line of credit [‘LOC’] at Suburban National. • CLC relies heavily on trade credit and short term debt. • Clarkson wants to move to Northrup National Bank – a larger bank – with a a $750K short-term LOC. • George Dodge, Northrup officer, is cautiously receptive. He’s asked a team of intelligent, attractive analysts to investigate the current state of CLC. Problem Identification “Clarkson wants to move to Northrup National Bank – a larger bank offering a $750K LOC.” • CLC overuses expensive short-term debt to finance growth and buyout his former partner. • It is our opinion that receiving a larger LOC from our bank will result in negative future growth and exacerbate current cash flow problems. • There are other problems with cash-flow, including inventory purchasing, A/R and a 2% A/P discount (opportunity). • PPE depreciation is an unkown; for our analysis, we factored it out. Findings • CLC can be a profitable investment for Northrup, but not with the stated credit terms. Debt restructuring is needed to maximize CLC’s profitability. • According to our research, CLC is in danger of growing at a “unsustainable” pace: a. Most metrics are highly positive b. DuPont shows...
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...consequences for the manufacturer: the return of the non-sterile product or, in the worst case, the negative impact on a patient's health leading to the device's approval being withdrawn. Therefore, medical technology companies make great efforts to ensure the correct packaging, testing and validation so the sterile barrier system remains intact. The burden on the packaging during its transition from the MDM to the patient is enormous and the risks to the integrity of the sterile barrier are numerous: The production method in the factory, the packing process, vibration during transport in trucks or aircraft, and careless packing workers are all potential sources of danger because hairline cracks or damage may be sufficient to affect the integrity of the medical product packaging, which may in turn effect the package's sterility. We spoke with industry experts and asked them to list from their perspective in the development and validation of medical packaging what are the most common errors. Transport Probably the biggest threat to the sterile barrier is during transport. The manufacturer has the responsibility to ensure the product arrives without damage to the customer. MDMs must be able to validate their packaging is capable of providing reasonable protection against transport risks. Most companies therefore conduct thorough testing that simulates the transport of their products. In many cases, however, this testing does not reflect the conditions under which the products are actually...
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...MAKING ENTERPRISE RISK MANAGEMENT PAY OFF Thomas L. Barton William G. Shenkir Paul L. Walker Prentice Hall PTR One Lake Street Upper Saddle River, NJ 07458 www.phptr.com Editorial/Production Supervision: KATHLEEN M. CAREN Executive Editor: JIM BOYD Marketing Manager: BRYAN GAMBREL Manufacturing Manager: MAURA ZALDIVAR Cover Design: TALAR BOORUJY ©2002 Financial Executives Research Foundation, Inc. Published by Financial Times/Prentice Hall PTR Pearson Education, Inc. Upper Saddle River, NJ 07458 Prentice Hall books are widely used by corporations and government agencies for training, marketing, and resale. The publisher offers discounts on this book when ordered in bulk quantities. For more information, contact: Corporate Sales Department, Phone: 800-382-3419; Fax: 201-236-7141; E-mail: corpsales@prenhall.com; or write: Prentice Hall PTR, Corp. Sales Dept., One Lake Street, Upper Saddle River, NJ 07458. All rights reserved. No part of this book may be reproduced, in any form or by any means, without permission in writing from the publisher. Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 ISBN 0-13-008754-8 Pearson Education LTD. Pearson Education Australia PTY, Limited Pearson Education Singapore, Pte. Ltd. Pearson Education North Asia Ltd. Pearson Education Canada, Ltd. Pearson Educación de Mexico, S.A. de C.V. Pearson Education—Japan Pearson Education Malaysia, Pte. Ltd. Pearson Education, Upper Saddle River, New Jersey A D V I S O R Y C O...
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...DOUGHNUTS, INC. Teaching Note Synopsis and Objectives Suggested complementary cases in financial statement analysis: “The Financial Detective, 2005,” (UVA-F-1486); “Deutsche Brauerei,” (UVA-F-1355); “The Battle for Value, 2004: FedEx Corp. vs. United Parcel Service, Inc.,” (UVA-F-1484) This case considers the sudden and very large drop in the market value of equity for Krispy Kreme Doughnuts, Inc., associated with a series of announcements made in 2004. Those announcements caused investors to revise their expectations about the future growth of Krispy Kreme, which had been one of the most rapidly growing American corporations in the new millennium. The task for the student is to evaluate the implications of those announcements and to assess the financial health of the company. This case is intended to be introductory as it can provide a first exercise in financial statement analysis and lay the foundation for two important financial themes: the concept of financial health, and the financial-economic definition of value and its determinants. Suggested Questions for Advance Assignment to Students 1. What can the historical income statements (case Exhibit 1) and balance sheets (case Exhibit 2) tell you about the financial health and current condition of Krispy Kreme Doughnuts, Inc.? 2. How can financial ratios extend your understanding of financial statements? What questions do the time series of ratios in case Exhibit 7 raise? What questions...
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