BUFN 755 Yale University Investments Case Study Executive Summary - Yale’s endowment is currently targeting its investment portfolio at a target investment is 33% in private equity, 28% in real assets, 19% in absolute return, 9% in foreign equity, 7% in domestic equity, and 4% in bonds. - In the changing global economy, Yale is looking to modify its investment strategy to effectively take advantage of new opportunities as they present themselves. - Yale takes proper precautions to mitigate risks and to find the best available investments by developing and managing its relationships with its investment managers to emphasize long-term mutual-benefit relationships with aligned incentives and interests. - Private Equity Investments offer the greatest amount of return at a reasonable risk, especially given Yale’s close relationships with its asset managers. - Yale should continue its current investment strategy, but should look to increase its private equity investment weight moving forward, especially in new international markets as they present themselves.
This is important because the D/E ratio has obviously changed after using the capital for the various acquisitions. This can be seen on step 2 of the excel spread sheet. One conflict was whether or not to use the book value or market value for the equity value. In this situation, I thought it would be efficient to use market value because as our debt levels change, we need to be cognizant of the market value of our equity as our company grows in size or downsizes. Once we have calculated our D/E ratio we can then use the asset betas from comparable companies included in exhibit 5 to find the beta of equity for each line of business.
Mr. Clarkson is willing to increase the amount by a new agreement with Northrup Bank. The cash flow crisis and repayments of short-term debts are the root causes of Mr. Clarkson’s need for additional financing. This report includes financial analysis and recommendation upon the request of Northrup Bank Credit Department. Analysis Using the ratio analysis, basic insights can be gathered about the financial performance of the company. For this analysis, we don’t have the ratios for the industry; thus, we will examine the trends for the years including 1993-1995.
9/18/13 Alliance Concrete Executive Summary: Based on available financial data and forecasts, Alliance Concrete should pay the $3million dividend to National as well as invest the full $16million in new fixed assets to assure that there are not shutdowns, as there were in 2004. By paying the dividend and purchasing new equipment Alliance will need to renegotiate with its bank in order to delay any scheduled debt retirement and instead acquire additional debt financing. Doing so will ensure that Alliance maximizes its Return on Equity as well as continue its trend of increasing earnings, which is especially important considering the slowdown in the real estate market. 1. A reduction in the dividend would decrease the need for long-term debt in multiple ways.
The second was the ‘American Selling Price tariff’ which linked the tariff to the prices of American goods and not how much they cost to produce. If France produced an item for $120 and the American selling price was $150 and the US tariff was 50%, the tariff would be $75. Foreign imports were therefore always more expensive than American produced goods. Before this, President Wilson had implemented low tariffs and did not want them to increase. However, when Harding became the President, increased tariffs were in extremely high demand and he thus made an emergency tariff in May 1921.
Debt servicing will need to be examined in detail to discover if one, both, or neither of these financing decisions will force the firm into bankruptcy. Finally, we shall like to look at the effect to equity holders. What are the real costs of dilution and is dilution always costly? With all of this in hand, the student will make recommendations to Wathen regarding this acquisition and the financing of it, covering all of the pertinent issues and considerations. PRELIMINARY TASKS The Preliminary portion of this case will be particularly important in that it has repercussions to the valuation of the synergy as well as to the bid process.
Despite a terrible current account deficit (USD800), the USD is heading towards a 140 JPY/USD level. There are 2 main reasons to explain the USD level in 2005. The first one is that thanks to a rising interest rates policy led by the FED (4.75%), the USD rose. Indeed high interest rates attracted Foreign Direct Investments (FDI), for example when the oil price increase a lot of oil exporting countries received a surplus in dollars and invested this surplus in US treasury bonds, and it helped to keep a strong USD. In the same time, the bank of Japan (BoJ) kept its interest rate close to zero.
Although both the coming and the arrival of the Great Depression did have some influence over the decision to repeal the Eighteenth Amendment, other factors played a part – most importantly the simple fact that prohibition didn’t work. In the early 1920s and throughout the 1930s America suffered through a period of economic decline, and because of this, the government in particular, was in need of funds to fuel its weakening economy. Taxation on alcohol would contribute towards the resources for relief, and prevent higher taxes in other areas of business which would only compound the situation. Each year the government was missing out on a sum of around $500 million which would be brought in by a tax on alcohol, and would significantly help America during the crisis. As well as this, an end to prohibition would eliminate the costs required to enforce it – an extra expenditure the government could not afford at this time.
This was determined by the Project on student debt, a non profit organization. Hard to believe but in 2004 that number has increased by 25% showing that the amount of debt from the increasing tuition is rising at an exponential rate. (Value of a College Degree) While some argue that being tens of thousands in debt is not bad, they tend to forget that this is just for some undergraduates, and for students that wish to pursue the highest education for their degree they must go through many more years of school and tuition. That could mean having debts in the hundreds of thousands for those who
As Jones sales growth rate is high than sustainable rate, so its net earning could not support increased account receivable and inventory. Then the company need bank loan to finance the increase business. 2004 2005 2006 First Quarter 2007 collection period 42.0 days 44.0 days 43.0 days 43.9 days payables period 10.1 days 10.0 days 24.1 days 37.4 days 3.Is Nelson Jones’s estimate that a $350,000 line of credit is sufficient for 2007 accurate? What will happen to Jones’s financing needs beyond 2007? Jones currently has $203,000 of accounts payable.