Premium Essay

Hill Country Case Study

Submitted By
Words 968
Pages 4
Hill Country practices the conservative capital structure, which has excessive liquidity and lower interest rates that will bring negative impacts on the company’s financial performance measures. So, it is a good opportunity for Hill Country to implement a more aggressive capital structure. For example, the Chief Executive Officer (CEO) of this company can increase the leverage ratio by either increase the debt or reduce the equity or both.
At first, debt financing usually used when a firm raises money for capital expenditures by issuing debt instruments to individual or institutional investors. In return for lending the money, the firm need to pay the principal plus interest payment at some agreed time in the future. The most common debt
…show more content…
Capital reduction is the process of reducing a firm’s shareholder equity through share repurchases and share cancellations. The reduction of capital method is used if the firm wishes to increase the shareholders’ values and to produce a more efficient capital structure. Hill country can repurchase their shares from the marketplace. A share repurchase not only reduces the number of shares outstanding, it also increases the earnings per share and elevates the market value of the remaining shares in the market. After repurchasing, these shares either will be cancelled or held as treasury shares. It means that these bought-back shares are no longer held publicly. So, I would recommend that Hill Country repurchase some of its shares and cancel it. This is because the purpose of the firm is to reduce the equity shares …show more content…
He also concentrated to maintain his company’s strong balance sheet. So, another alternative that I would recommend for this company is through the off-balance sheet financing (OBF), which is the operating leases. This method can enhance the cash flow of the firm and substantially build up the leverage without adding to the amount of the debt. For example, Hill Country can rent a piece of equipment and buy this equipment at the end of the leases period with minimum purchasing cost. Before this equipment is bought, Hill Country only records the rental expenses for the equipment in the company’s financial statement throughout the years. When the company buy it, then only the amount of asset and liability are recorded. So, the CEO of Hill Country can keep his company’s leverage ratio and debt-to-equity ratios at lower rate. It can avoid that the leverage ratio and riskiness of the company will weaken the strength of balance sheet and periodic

Similar Documents

Premium Essay

Questions for Case Study 3 Hill Country Snack Foods

...QUESTIONS FOR THE ‘HILL COUNTY SNACK CO’ CASE STUDY (TO BE ANSWERED IN THE STUDENT GROUP REPORTS) In your group report, you should attempt to answer the following questions. For each question, a few paragraphs or sentences should be enough; I should stress that I am more interested in understanding the quantitative analysis or reasoning that led you to your answer in the report, than in the numerical accuracy of the answer (not that the latter is not important at all!). It is recommended that you upload to moodle any files that might facilitate me in understanding your answers (e.g. excel worksheets with computations of intermediate steps, etc.) Questions 1. How much business risk does Hill County face? How much financial risk would the company face at each of the three alternative debt-to-capital ratios presented in Exhibit 4? How much value could Hill County create for its shareholders at each of the three alternative debt levels? 2. What debt-to-capital structure would you recommend as optimal for Hill County? What are the advantages of adding debt to the capital structure? How would issuing debt impact the company’s taxes and expected costs of financial distress? How would the financial markets react if the company increased its financial leverage? 3. How could Hill County implement a more aggressive capital structure? What methods could be used to increase debt and decrease equity? 4. Considering Hill County’s corporate culture, what arguments could you use to persuade......

Words: 258 - Pages: 2

Premium Essay

Global Business Management

...Module Name and Code : Global Business Management () Programme: Master of Business Administration Degree Surname: Dhorat First Names: Ahmed Iqbal Table of Contents 1. Introduction 3 2. Question One : Logitech Case Study 3 3. Question Two : Dixon Ticonderoga Case Study 3 Question 2.2 : Dixon's Strategy 3 Question 2.3.1 : Arguments Raised by Dixon Ticonderoga in Favour of Anti-dumping Duties 3 Question 2.3.2 Alternatives to Anti-dumping action 4 4. Question Three : Foreign Direct Investment ( FDI ) 5 Question 3.1 : The Reasons for FDI Growth Over the Past 20 Years 5 Question 3.2 : Mergers and Acquisitions vs. Greenfield Investments 6 Question 3.3 : Using Vernon's Product Life Cycle to explain FDI 8 5. Question Four : Functions of the Foreign Exchange Market 9 6. Conclusion 10 7. References 10 8. Bibliography 11 Introduction Heizer and Render (2008) have highlighted ten critical operations management functions which were referred to as “ Decision Areas”. Senior management outlines Question One : Logitech Case Study 1 Question 1.1 : Logitech's Decision to Locate Production in China As with most cases there are both supporters and critics of free trade. Usually industries that find themselves at a competitive disadvantage to foreign goods and services are opposed to free trade and seek protectionist measures from governments. From an economical perspective, free trade reduces costs of products as companies take advantage of lower costs in......

Words: 4579 - Pages: 19

Free Essay

Case Study "Nike: the Sweatshop Debate"

...Case Study "Nike: The Sweatshop Debate" Sarah Martin MGT 448 July 27, 2011 Kenneth Peter Case Study "Nike: The Sweatshop Debate" “We’ve run the course – from establishing codes of conduct and pulling together an internal team to enforce it, to working external bodies to monitor factories and engaging with stakeholders” (Nikebiz, para. 2). The creation of this code of conduct came after serious allegations of using sweatshops with women and children working in hazardous conditions for less than minimum wage in overseas factories scattered across the globe to make their product. This paper uses the case study entitled, “Nike: The Sweatshop Debate,” to describe the legal, cultural, and ethical challenges that confront Nike’s global business. This paper will also determine the various roles that host governments have played as well as summarize the strategic and operational challenges that face global management for the Nike Corporation. Bill Bowerman, a track and field coach at the University of Oregon, and Phil Knight, a talented middle-distance runner from Portland, “shook hands to form Blue Ribbon Sports, pledged $500 each, and placed their first order of 300 pairs of shoes in January 1964” (Nikebiz, para. 1). In 1965, they hired their first employee, Jeff Johnson, to manage the growing requirements. In 1971, he conjured up the name Nike. According to the case study, the profits and success that the Nike Corporation has gained has affected hundreds of thousands of......

Words: 1153 - Pages: 5

Premium Essay

Case

...BRANNIGAN FOODS STRATEGIC MARKETING PLANNING CASE SOLUTION PDF Copyright © 2014. All Right Reserved BRANNIGAN FOODS STRATEGIC MARKETING PLANNING CASE SOLUTION PDF Download: BRANNIGAN FOODS STRATEGIC MARKETING PLANNING CASE SOLUTION PDF Are you trying to find Ebook Brannigan Foods Strategic Marketing Planning Case Solution PDF?. You will be happy to recognize that today Ebook Brannigan Foods Strategic Marketing Planning Case Solution PDF is offered on our on-line collection. With our on-line resources, you will certainly be able to locate Ebook Brannigan Foods Strategic Marketing Planning Case Solution PDF or practically any sort of sort of manual, for any kind of type of product. Best of all, they are completely complimentary to find, use as well as download and install, so there is no price or anxiety in any way. Ebook Brannigan Foods Strategic Marketing Planning Case Solution PDF may not make exciting reading, however Ebook Brannigan Foods Strategic Marketing Planning Case Solution PDF is stuffed with valuable guidelines, information and warnings. We have made it very easy for you to locate a user manual with no digging. And by having access to our manual online or by storing it on your computer system, you have hassle-free answers with Ebook Brannigan Foods Strategic Marketing Planning Case Solution PDF. To obtain begun locating Ebook Brannigan Foods Strategic Marketing Planning Case Solution PDF, you correct to locate our site which has a comprehensive collection of......

Words: 1371 - Pages: 6

Free Essay

Nike Case Study

...University of Phoenix Nana Offei MGT/448 Global Business Strategies Case Study Nike: The Sweatshop Debate July 5, 2012 Professor, Marc Mosko Nike, the sweatshop debate Nike Inc. was started by Bill Bowerman and Phil Knight, who met each other in 1957 Before going into business, Knight became a certified public Accountant (CPA) the original Nike Inc. was founded in 1964 by Phil Knight and his friend Bill Bowerman with a collective investment of 1000 to fund the business tries (Nike repository, 2010) The company began with Bill and Phil being local distributors for the Onitsuka Tiger footwear brand now own by Asics footwear, Bill and Phil did business out of their cars at local track meet and sporting event to athletes in the vicinity of the University of Oregon, the first sport retail store open in California in 1966 as where the company profit began to grow they realized that their financial limits imposed by Onitsuka Tiger would limited their long team profits (Nike repository, 2010) This paper will describe the legal culture ,and ethical challenge that confront the global business as personated on the case study, in addition the paper will determine the various roles that the host government played in global business operation .at the end it will summarize the strategic and operational challenges facing global managers illustration in Nike organization Global business doesn’t come without challenges Nike organization plan......

Words: 1070 - Pages: 5

Free Essay

Marketing

...USA TODAY – INNOVATION IN AN EVOLVING INDUSTRY: INDIVIDUAL CASE STUDY Victoria Hill USA TODAY – INNOVATION IN AN EVOLVING INDUSTRY: INDIVIDUAL CASE STUDY Victoria Hill Table of Contents 1. Executive Summary ............................................................................................................................. 3 2. Identification of the Problem ............................................................................................................... 3 3. SWOT Analysis..................................................................................................................................... 4 3. 1. Strengths ..................................................................................................................................... 4 Strength 1. Highly innovative newspaper company that has been a leader in news development .... 4 Strength 2 – Gannett is currently the largest newspaper distributor in terms of circulation ............. 4 Strength 3 – Strong portfolio with multiple Brand Extensions and Partnerships ............................... 4 Strength 4 – Excellent presence and distribution in the digital environment .................................... 4 3.2. Weaknesses .................................................................................................................................. 6 Weakness 1 – Relatively small amount of digital subscribers ....................................................

Words: 4344 - Pages: 18

Free Essay

Google in China

...Case Study: “Google in China” University of Phoenix-MGT/448 November 28, 2011 Case Study: “Google in China” This case study will review and address Google’s entry into China. The following topics will be addressed: legal, cultural, and ethical challenges experienced by Google. This case study will also examine the role of China’s government in Google’s decision to operate globally in China as well as the strategic and operational challenges faced by the management team of Goggle with their decision to operate in China. In an effort to enter business in China and gain access to the world’s largest country, Google began offering a Chinese language service in 2000 from operations in the United States. In 2002, the Google site was blocked by the Chinese government and users were redirected to another site (Hill, 2009). Two weeks later, service was restored with no apparent reason or understanding of why the block initially took place or why it was restored. After the Google site was accessible by Chinese users again, politically sensitive sites were still not accessible, which implied the Chinese government was censoring certain sites. Google realized the need to establish operations in China, which finally occurred in 2005, despite challenges and criticism. Challenges Faced by Google There were many legal, cultural, and ethical challenges facing Google when the decision was made to provide services to China. When Google entered China, locations and hosted servers...

Words: 751 - Pages: 4

Premium Essay

International Business

...COLLEGE OF ECONOMIC AND MANAGEMENT SCIENCES DEPARTMENT OF BUSINESS MANAGEMENT An assignment submitted in partial fulfilment of the course: INT4801 (International Business) Assignment 03 Due Date: 09 October 2015 Table of Contents TABLE OF CONTENTS ..................................................................................................................................................... 1 QUESTION 1: CRITICALLY EVALUATE THE IMPORTANCE OF WORLD TRADE ORGANISATION (WTO) AS A REGULATORY BODY IN INTERNATIONAL TRADE ARRANGEMENTS. .................................................. 2 INTRODUCTION ......................................................................................................................................................................... 2 AGREED LIBERALIZATION ............................................................................................................... ERROR! BOOKMARK NOT DEFINED. RULE OF LAW.............................................................................................................................. ERROR! BOOKMARK NOT DEFINED. QUESTION 2: EXTENSIVELY ANALYSE THE RELEVANCE OF SUBSIDY AS AN INSTRUMENTS OF TRADE RESTRICTION, ESPECIALLY IN AGRICULTURE SECTOR. ................................................................... 9 INTRODUCTION ...........................................................................................................................................................

Words: 5530 - Pages: 23

Premium Essay

Effect of Fdi by Mncs in Developing Countries

...Effects of FDI by MNCs in Developing Countries What are Multinational corporations? What motives do they have for foreign direct investment? This paper explores these questions and seeks to find explanations by exploring key economic theories. The impact of FDI on developing nations is discussed with analysis and evaluation of the positive and negative effects. The findings of this essay are that FDI is neither entirely good nor bad for a country. Instead its effects vary and depend on a number of factors. Whilst firms have different strategies and objectives, the aim is ultimately to gain profits. In some instances this comes at the detriment of the welfare in the host nations, but it can also have benefits for these developing countries. | Introduction Foreign direct investment (FDI) has played an important role in developing countries with these nations receiving an increasing share of world FDI inflows (see Fig.1 below). From 1985 to 1990, the FDI inflow into developing nations was 17.4% of the total global flow. This increased to 31-40% in the four years leading up to the financial crisis (Hill, 2014). FDI acts as a major contributor to capital formation in developing countries and can promote growth and sustainable development. However, there are many challenges that the host country can face when dealing with multinational corporations (MNCs). By looking at key issues and analysing empirical evidence, the positive and negative effects that foreign direct......

Words: 2715 - Pages: 11

Premium Essay

Week4

...Case Study LaToya Moore MGT/448 March 6, 2013 Jeffery Trapp Case Study Nike is a company that is known to be a global corporation. Nike is a corporation that advertises and designs its merchandise over several countries. Nike is known for are famous logos and swoosh that is located on the merchandise. In 1972 Nike was established and founded by Phil Knight a former tack star of Oregon University. Nike is the planets leading athletic shoe and apparel manufacture in the world. Michael Jordan and Tiger Woods are the main attractions for sponsoring this product. Legal, Cultural, and Ethical Challenges The biggest legal issues that Nike has to worry about are the age limited of their workers. It has been said that Nike has underage children working in the sweatshop slaving and not making enough money to survive. Not only are the children working in the company legally, but they are working under hazardous conditions that are affecting the children and other workers health. To assure safe and healthful working conditions for working men and women; by authorizing enforcement of the standards developed under the Act; by assisting and encouraging the States in their efforts to assure safe and healthful working conditions; by providing for research, information, education, and training in the field of occupational safety and health; and for other purposes. ”That this Act may be cited as the "Occupational Safety and Health Act of 1970." Nikes......

Words: 573 - Pages: 3

Free Essay

Boeing Case Study

...Boeing Case Study Group 2 Embry Riddle Aeronautical University Question 1 The benefits of Boeing outsourcing are; cost in manufacturing 787 parts and labor, finding experts that make specific parts, and introducing the 787 to different countries expecting to increase sales. The risks of having different manufactures to make one plane include; delays in manufacturing parts, factories having to move or close, costs of resources in different parts of the world can fluctuate, and taxes and tariffs can change during the course of manufacturing. If the company can produce the 787 cheaper by outsourcing then, yes the benefits do outweigh the risk. However, from the scenario there are several drawbacks of the foreign companies and the risk is too high. Boeing should do the work themselves. Question 2 Boeing failed to ensure that the other nations brought onboard to manufacture certain components of their aircraft were properly set up and prepared to start manufacturing. Boeing should have had more oversight of Italy’s issues with building a factory and they should have required proof that Italy already had adequate property to build the factory. Boeing also should have verified that there would be no local government interference that would hinder the ability to meet delivery deadlines. The other issue was one of their suppliers, Vought, outsourced to a different nation. Boeing should have had a clause in their contract with Vought, stating that if they......

Words: 565 - Pages: 3

Free Essay

Reproductive Health Seeking Behavior of the Young Female Tribal Workers in Chittagong: Implications on Fertility

...CHAPTER ONE INTRODUCTION Promote the right of every woman, man, and child to enjoy a life of health and equal opportunity. Ensure that every pregnancy is wanted, every birth is safe, every young person is free from HIV/AIDS, every girl and woman is treated with dignity and respect. Because every one counts. Thoraya Obaid, Executive Director, UNFPA 1.1 BACK GROUND OF THE STUDY Bangladesh though a small country in area, is one of the densely populated countries in the world along with136.7 (BDHS 2004) million people having 953 ( national economic review 2007) persons per square kilometer. But it is a country of variety with different landscapes and waterscapes. The south- eastern hill tracts of Bangladesh including three districts Rangamati, Khagrachari, and Bandarban are the biggest abode of different tribal communities which occupy one tenth of our land and more than one percent of total population of the country. In Bangladesh there are approximately 45 tribal communities (MOHFW 2004) like Chakma, Marma, Murang, Khumi, Hajong, Monipuri, khashia, Garo, Mog, Rakhain, and the majority of them live in these hilly districts. The tribals are the economically backward ethnic group. They are food gathers, hunters, forestland cultivators, and minor forest product collectors. They lived in isolation with near to nature hence, called son of soil. Tribes constitute separate socio-cultural groups having distinct customs, language, traditions, marriage, kinship, property inheritance......

Words: 4245 - Pages: 17

Premium Essay

Globalstrategy and Multinationals' Entry Mode Choice

...CHOICE W. Chan Kim* INSEAD Peter Hwang** Baruch College Abstract. This paper makes a case directed towards establishing the importance of global strategic considerations in choosing multinationals'entry mode. Specifically,it is our contention that beyond the environmental and transaction-specificfactors well established in the literature to affect the entry mode decision, we should also consider the strategicrelationshipa multinational envisages between its operations across borders in reaching this decision. After incorporating various global strategic variables into an eclecticframeworkof the factorsinfluencing entrymode the choice, this paper tests both the validityof the overall framework and the importance of each entry mode determinant in differentiating among entry modes. This is done based on ninety-six multinational managers' responses to a survey questionnaire concerning their entry mode decision experiences. The results suggest that an express incorporationof global strategicvariables into an analysis of the entry mode decision is warranted. This paper is concerned with the critical decision of multinationals' foreign entry mode choice. While existing studies have already identified a diversity of variables that influence this decision, in our view these variables can or essentiallybe collapsedinto one of two categories:environmental ftansactionspecific factors. Common to existing studies identifying these factors is their underlying assumption that each entry......

Words: 3800 - Pages: 16

Free Essay

Isp Chile Analysis Syllabus

...NEW YORK UNIVERSITY Stern School of Business – Undergraduate Division International Study Project (Spring 2007) Latin American Division http://sternclasses.nyu.edu Instructors (jointly teaching all four sections) |Name |Sunder Narayanan |V. Srivatsan | |Office |901 Tisch |KMC 8-85 | |Phone |(212) 998-0541 |(212) 998-0427 | |Stern E-mail |snarayan |vsrivats | |Office hours |By appointment |By appointment | Course Information |Section |C50.0011.04 |C50.0011.05 |C50.0011.12 |C50.0011.13 | |Meeting Time |MW 11:00-12:15 |MW 2:00-3:15 |TR 2:00-3:15 |TR 3:30-4:45 | |Classroom |KMC 4-90 |Tisch UC-63 |Tisch UC-63 |Tisch UC-63 | |Company | ...

Words: 2950 - Pages: 12

Premium Essay

Case Study

...Case Study Frank Torres MGT/448 May 6, 2016 Professor Louise M. Lozada-Sorcia Nike must overturn problematic problems in order to establish a successful commerce in a foreign country. Some of the legal, cultural, and ethical challenges that confront Nike’s global business are child labor laws, wages, and outsourcings of manufacturing. Nike sweatshop labor case like those described in “Nike: The Sweatshop Debate” has agitated a large sum of controversy over business ethics. The first case illustrates how Nike has inadvertly managed to oversee that those companies they subcontract do not follow international labor laws, including those pertinent to the country the employees are working from. An example is the employee Lap, interviewed in the article. The employee is exploited, “Her basic wage, even as sewing team leader, still doesn’t amount to the minimum wage . . . . She’s down to 85 pounds. Like most of the young women who make shoes, she has little choice but to accept the low wages and long hours. Nike says that it requires all subcontractors to obey local laws; but Lap has already put in much more overtime than the annual legal limit: 200 hours.” Another evident situation that challenges business ethics is the cultural depreciation in the countries where Nike contracts with manufacturer subcontractors. Countries like China and Indonesia close to non-existent labor laws, “The majority of Nike shoes are made in Indonesia and China, countries with governments......

Words: 853 - Pages: 4