Evaluation on share repurchase proposal of blaine kitchenware inc. essay

Essay Sample Published by admin on January 27, 1.

Evaluation on share repurchase proposal of blaine kitchenware inc. essay

Research papers Tagged With: Finance 4 pages, words 1. Inappropriate current capital structure and payout policies3 2. Advantages and disadvantages of large share repurchase proposal4 a.

Effects of share repurchase on assets, liabilities and equity on balance sheet5 b. Effects of share repurchase on debt ratios and interest coverage ratio5 c.

Bonus question—effects on wacc6 4. Effects of the proposed share repurchase on shareholders6 Appendix7 Executive Summary The main problem faced by BKI is over liquidity and under leverage. The capital structure of Blaine is too conservative. The main source of funding for business comes from equity capital.

In the meantime, current payout policies make payout ratio go up, lowering efficiency of the firm. The company can solve these problems by issuing debt to repurchase its stock. Debt is a lower cost source of financing and allows a higher return to the.

In addition, the company can benefit from tax-deductible interest and thus lower tax burden. However, debt is not always excellent, and we should analyze whether the profitability of raising the debt is greater than the cost of leverage. The company increased it s interim dividend to 4.

Also consumers will spend less. Both of these factors will lead to a fall in company Blaine Kitchenware was a mid-sized producer of small appliances primarily used in residential kitchens. Moreover, its earnings per share had fallen significantly sincepartly due to dilutive acquisitions.

The first was during World War II and second during oil shock of s. Inappropriate current capital structure and payout policies Currently, the main source of funding for its business comes from equity capital.

Evaluation on Share Repurchase Proposal of Blaine Kitchenware Inc. Essay Sample

Here are some explanations. First, current capital structure makes high cost of financing despite its low risk. Although risk will increase as debt increases, debt financing will lower the cost of capital and increase returns to shareholders.1.

Inappropriate current capital construction and payout policies Currently. the chief beginning of support for its concern comes from equity capital.

However.

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this capital construction and payout policies for Blaine’s Kitchenware Inc. is non the most appropriate. Here are some accounts.

Evaluation on share repurchase proposal of blaine kitchenware inc. essay

Effects of share repurchase on debt ratios and interest coverage ratio5 c. Effects of share repurchase on Earnings Per Share and Return On Equity5 d. Bonus question—effects on wacc6 4. Evaluation on Share Repurchase Proposal of Blaine Kitchenware Inc. Essay Evaluation on Share Repurchase Proposal of Blaine Kitchenware Inc.

Group 7 Contents Executive Summary 3 Overview of problems 3 Analysis on Capital Structure & Payout Policies of Blaine 3 1. Evaluation on Share Repurchase Proposal of Blaine Kitchenware Inc. Essay Sample. Pages: 8; Word count: 1,; Advantages and disadvantages of large share repurchase proposal The large share repurchase should be recommended to Blaine’s board.

The followings are advantages of share repurchase. Evaluation on Share Repurchase Proposal of. its acquisition plans (which is mainly done by cash and BKI stocks).

should it only partially repurchase the market float or should it go for complete buyback (in which the Blaine family becomes the owner of all the remaining shares).The dilemma Blaine Kitchenware Inc.

Evaluation on share repurchase proposal of blaine kitchenware inc. essay

3. Evaluation on Share Repurchase Proposal of Blaine Kitchenware Inc. Group 7 Contents Executive Summary 3 Overview of problems 3 Analysis on Capital Structure & Payout Policies of Blaine 3 1.

Evaluation on Share Repurchase Proposal of Blaine Kitchenware Inc. | Essay Example