To: From: Date: February 14th, 2012 Subject: South Delaware Coors Case Analysis ____________________________________________________________ ____ Overview The problem in this case is determining whether or not Larry Brownlow should invest in one of two potential Coors distributorships in the state of Delaware. With a research budget of $15,000 Larry has the choice of which research reports he wants Manson and Associates (a research and analytics firm) to collect. The datum collected by Manson and Associates are compiled into appendices from which Larry has to choose the most relevant information in order to make his final decision on whether to open the distributorship. Recommendation * After thorough analysis, we recommend that Larry purchase Table A, B, C, G, and I for a total of $12,500. * Based on the analysis of the tables and data purchased from Manson and Associates, we recommend that Larry not open a Coors distributorship in South Delaware.
It also indicates that investors are expecting a higher future growth in company D compared to company C which has a lower p/e ratio. From the article, we know that company C is a national brewer
The cost of these studies, as estimated by Manson and Associates, is $14,049.50, which approaches the $15,000 that Larry has available for research. In stage one of the Manson studies, Study D provides an overview of the competition he faces from other distributors in the same area. Study E will give a clear indication of the amount of beer Larry can expect to sell in the two-county area, based on taxes paid per gallon in the market area between 1987 and 1988. Study F will give Larry the opportunity to peruse income statements and balance sheets for similar wholesale distributors nationwide, with an eye towards potential profitability. This particular study will provide key elements with regard to capital structure which should prove beneficial to the operator, particularly for a new entry.
“(Kerin & Peterson, 2010, p. 301). Bates: “Yes, John has requested additional funds. Your right about the 5 percent figure too, and I’m not sure if our sales forecast isn’t too optimistic. Your research has shown that our sales historically follow industry sales almost perfectly, and trade economists are predicting about a 4 percent increase for 2008 Yes, I’m not too sure” (Kerin & Peterson, 2010, p.301). Berry: “Well, Chuck, you can’t expect forecasts to be always on the button.
(3) Price reduction of 20% -Pros: competitive the price with other company. Increase the sales in do-it-yourself market. -Cons: the quality will be questioned. Could decrease the sales. (4) Add additional sales reps at a direct cost of $60,000 each -Pros: could have professional motivation team could increase the sales.
In recent years, the company increased its number of outstanding share to finance its acquisitions, which raised the payout ratio to more than 50% in 2006. Blaine Kitchenware fears that such a dividend policy isn’t sustainable in the future. Indeed, if the company keeps a high dividend payout without the cash flow to back it up, it will have to reduce its investment plans or turn to investors for additional debt or equity financing. As pointed by a banker, because the company is over-liquid and under-levered, using Blaine kitchenware’s excess cash and new borrowing, a private equity firm could buy all the outstanding share of the company. In light of that discovery and fearing this hostile takeover, Victor Dubinski is thinking of revising the company’s financial policy (i.e.
As we can see, these two factors would give any company a big edge in the frozen novelty industry, which in my mind commands a higher premium. When estimating Eskimo Pie’s value, past performance must also be considered. As can be seen from Exhibit 1 in the case, net sales have increased over 50% since 1987 ([47198 - 30,769] / 30,769), and profits have skyrocketed over 1300% since 1987 ([2526-171] / 171). Taking into account all of these factors in to account, I think that as a stand-alone company, Eskimo is worth at least 1.3 times 1990 sales, or $61 million. 2.
Dollar General in owned by Koldberg Kravis Roberts & Co. L.P (KKR) who own more than 79% of all shares in Dollar General. Some argue that part of the reason Dollar General has been so successful as of late is attributed to the economic crisis the United States experience during the second half of the 2000s. Economist believe that consumers will not shop at the Dollar General as much as the economy improves. In an effort to retain their existing customers and recruit new ones as the economy strengthens, Dollar General has begun to stock name brand items. Some analysts also believe that even when the economy improves, your average consumer will still look for ways to save money and continue to frequent the dollar discount stores.
Clarkson Lumber Company Clarkson Lumber Company is in retail distribution of lumber products. It was founded by Mr. Clarkson and his brother-in-law, Henry Holtz in 1981. In 1994, Mr. Clarkson bought out Mr. Holtz’s interest for $200,000, payable in 4 semi-annual instalments from June 30, 1995 with interest @11% p.a. Firm has achieved good growth in sales and profits during recent years, but is facing shortage of cash. It expects sales of $5.5 million during CY 1996 and would need additional loan over and above existing loan of $399,000 as on March 31, 1995.
Average turnaround time (TAT) has grown from about three days in 1989 to more than five days in 1991 while its main competitor, Golden Gate, has achieved two-day TATs and is now promising one day. As a percent of revenues, branch profits in 1989 were 20.2%; in 1991, the branch suffered a 1.7% loss (Exhibit 1). Analysis There are five fundamental problems with the current process: 1. The relative value of new policies and renewals is not clear to the underwriting teams. While new policies are important for Fruitvale’s long-run viability, they are more risky (Exhibit 1) and require more labor to process (Exhibit 2a).