As the variable cost is too high as we increase the production. As this is a highly competitive firm so they can ask for high price to increase the profit margin. 3. Assume the price is $40 per ton, should they consider closing down? Why, or why not?
These expenditures could be spread over several years to minimize the overall cost of acquiring these technologies. An example of this occurred during the second round, where R&D expenses were extremely high which made investing in new technologies and features much more costly. A wise decision would be to wait until the costs are more stable, which would allow MobAir to reduce costs and maintain solid profits. Market Share MobAir is concentrated on creating a high market share percentage and maintaining it throughout its different rounds. Which was successfully accomplished by building many plants in U.S.A. and Asia, and producing the accurate amount to satisfy demand.
Therefore, value is transferred from the bondholders to the shareholders by undertaking risky projects, even if the projects have negative NPVs. This incentive is even stronger when the probability and costs of bankruptcy are high. 4. Stockholders can undertake the following measures in order to minimize the costs of debt: 1) Use protective covenants. Firms can enter into agreements with the bondholders that are designed to decrease the cost of debt.
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.
On the other hand MI backed mainly by shareholders equity and performing assets and thus would be able to issue new debt increasing value for both shareholders and the corporation. Thus the shareholders would gain at the expense of bond holders and the equity value of the company would increase. b) Bondholders Bondholders had a lot to lose as according to Project Chariot almost all the debt would be assigned to HM. Given the problems in real estate and hotel markets there was a concern of HM’s ability to meet its debt payment and there was a high probability of default. This meant that the risk was issued at investment grade but now was not backed by valuable assets of the companies which were to be spun off to MI which was to be backed by equity.
Problems of Balanced Scorecard Implementation “Balanced scorecard recognizes some of the weaknesses and vagueness of previous management approaches which provides a clear prospection as to what companies should measure in order to balance the financial perspective,” (Paul, 1998) so does Media General. Media General is a successful company to develop balanced scorecard. The balanced scorecard empowers the shareholders to maximize their values, and also successfully improves objective statement to solve financial issues and achieve media convergence. However, balanced scorecard system of Media General still has some important problems in the implementation process. If Media General cannot deal with these problems as soon as possible, it would not afford future loss.
Such economies of scale will allow Berkshire to offset the very high costs of cold-forming equipment. Business StrategyA careful analysis is needed in order to determine Berkshire’s business strategy. At first one would think it was product differentiation because of the inelastic demand in the short run. But one thing that should also be noted is the fact that for most goods, demand is much more price elastic in the long run than in the short run. This combined with the fact that Berkshire is convinced that it could not individually raise prices without suffering substantial volume declines, and that all the products of the different manufacturers in the industry are very similar, prove that their business strategy is in fact cost leadership.
There is $2.5 million sinking fund required which leaves $12.5 million outstanding at maturity. The issues with this method are as follows: Long-term-debt can be burdensome and can stunt or slow growth of the company. The company has to payback what was borrowed plus the interest on the debt. It also puts stockholders and management who are primary holders of stock at risk, because if the company earnings are substantially lower than what was forecasted then the bondholders can virtually gain control of company. The second alternative would be the possibility of issuing new common stock of 3 million shares offered at $17.75 per share.
There is a problem to antici pate the under developed material need to be solved and how to control the cost is also the issue, if the company need to be more stronger especially under the fast development situation, no doubt cost control will be very important. Meantime the internal supply chain communication is not so efficient which also need to be improved. According to the current situation, to reset the external supplier structure and internal management improvement is kind of supplier management and BVSx in on the way now. SWOT analysis [键入文字] Strength Weakness • No.2 in the field and still grows fast, has more bargain power towards the suppliers • Strong R&D competence • Independent from the corporate parent, relatively easy for decision making •
The problem with mercenaries is that they were expensive to obtain and even more expensive to retain. Usually, the mercenary would fight for the highest bidder. To counteract the rise in expenses, monarchs imposed more taxes on the people. In conclusion, the