If a lot of debt is used to finance increased operations then it will incur a high debt to equity ratio, the company could potentially generate more earnings than it would have without this outside financing. If this were to increase earnings by a greater amount than the debt interest cost, then the shareholders benefit as more earnings are being spread among the same amount of shareholders. However, the cost of this debt financing may outweigh the return that the company generates on the debt through investment and business activities and become too much for the company to handle. This can lead to bankruptcy, which would leave shareholders with nothing. The debt/equity ratio also depends on the industry in which the company operates and Smithon Widgets being a manufacturing company the debt equity ratio is normally high.
After reviewing Harnischfeger, we believe that at the time of the case it would be a risky investment. Looking in its past history of declining stock prices of a loss $7.65 per share in 1982 and 3.42 in 1983 we can see the natural economic trend of an expansion in the 70’s and contractions in the past years. Harnischfeger had several problems leading to a decline of sales in the 1980’s. They relied on debt to provide for the expansion in the 70’s, but they could not foresee declining sales and high interest payments that led to poor profit performance ($77 million). With this loss Harnischfeger defaulted on certain covenants on its loans.
Diversity permits skills and experience from other cultures to assist in the continued success of the company. Diversity continues through the vendors or known as the advertisers that provide the revenue for Facebook to continue operating. It is important for Facebook to stay well rounded and the way to accomplish this is to ensure the advertisements endorsed through Facebook are well diverse. Important in the success of the company to offer advertisements geared to different areas of nationalities, race, sex, age, etc. Also the advertisers need to offer the same diversity with his or her own company.
Alcoa put safety first which is a great quality to have in any business. In my opinion Alcoa used the integrity approach as far as the ethical criterion. To use an integrity approach is the best method in my opinion because to have integrity is having wonderful core values in my opinion. The top management enforced the Alcoa program. The Alcoa
If interest rates remain at the level they currently are, then a capital structure with debt financing would be a good option. However I believe that the Federal Reserve cannot keep the interest rates as low as they are now for much longer and that we will see interest rates rise in the near future. When this happens the market value of the corporate bonds will be less for investors. We will see a shift from debt financing for companies back to equity financing because investors will gain a better return. With debt financing, the company has an obligation to make periodical coupon payments and ultimately pay back the face value of the bond at expiration.
This is an important issue due to the fact that biotechnology is heavily affected by capital availability and recently, venture capitalists were reluctant to fund biotechnology firms. As Jeff Hirst said, “When it comes to raising capital today, it’s a buyers’ market.” Therefore, producing returns for our current investors and producing high returns for potential buyers was a key focus. A second key issue was the probability of successfully completing each phase of testing. For both Phase I/II and Phase III, if the phase was not completed, there would be zero sales and all capital expenditures would be rendered useless. Phase I/II seemed relatively routine; however, Phase III was much more complex and presented a much bigger risk of preventing FDA approval and eliminating all future sales.
Tanglewood should focus on hiring internally. With the proper training and encouragement not only would the employee benefit but Tanglewood would benefit as well. Internal hiring would also keep Tanglewood’s cost low. Core Flexible Workforce Tanglewood already seems to focus on Core Workforce. I believe focusing on Core Workforce is the best decision for their culture and values also.
TSE is having an aggressive growth-by-acquisition plan to create opportunities and entries into more dynamic markets than the ones TSE presently served. They find although it had done well in the past, but the company had produced few new breakthrough products in recent years. If this trend continued, TSE would be left behind its competition. Now, they are considering Yeats Valves the first among several potential targets. But right before the acquisition plan, there were cruel month for stocks in general with the bursting of the dot-com bubble.
Currently, the division anticipates that the brand’s cash flow in the coming periods will allow the company to pursue new opportunities in emerging markets. However, the competitive nature of the OTC cold remedy market is causing a concern. The senior management is worried that this competitive activity will lead to a declining market share and profitability for Allround. They have lost one full share point in the last year. The goal is to maintain long-term profitability and market share in an increasingly competitive and changing environment.
Risks involved. * Access to a strong brand * Legitimity for its business model, « stamp of approval » Risks * Might lose few buy-side clients, * Clients are extremely concerned about the exclusivity of the info, alliance with CS will be a problem. In particular hedge funds invest lots of money on what they think is a proprietary info 3/ Does this alliance favor one or the other of these two firms? * Opportunity for GLG to invest in new technology, geography, and clients segments * For CS