Although investors take dividend as an indicator for a company to succeed, they also expect dividend will be paid continuously at either stable or growing rate. Blaine is currently over-liquid and under-levered and their shareholders are suffering from the effects. Although this will involve the company raising a significant debt, this will also give them complete control to the promoters.
Their management will have increased stakes, this will reduce their chance of being acquired and this will provide more dividends to their remaining shareholders. In other words, Blaine does not fully utilize its funds. In other words, Blaine does not fully utilize its funds.
Other Income expense 13, 13, Less: Acquirers could pay way less than they originally expect to buy out the firm. Since Blaine Kitchenware is a public company with large portion of its shares held by their family members, they have a financial surplus, which decreases the efficiency of its leverage.
Blaine is currently over-liquid and under-levered. Interest 0 Earnings Before Tax 77, 74, Less: Investors usually consider the periodical dividend as an evaluation for a healthy company.
Following is the operating results for the year when the capital structure is levered and unlevered. Although investors take dividend as an indicator for a company to succeed, they also expect dividend will be paid continuously at either stable or growing rate. Since they are totally equity financed, there is no tax shield.
Dividend payout ratio 0. Why or why not? A huge amount of cash would not only offer possible acquirer incentives to buy Blaine with its own cash but also decrease the enterprise value of Blaine. How would such a buyback affect Blaine?
Blaine has an unlevered capital structure currently i. They should also consider things such their acquisition plans, their earnings per share and their dividend per share, ownership structure, capital structure and of course the reputation of the company in the market after the buyback.
The management should use the available cash and invest in attractive investments. In other words, acquirers could pay way less than they originally expect to buy out this family-based family.
However, concluding whether an unlevered or a levered capital structure is appropriate for a company largely depends on the industry debt equity ratio i.
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Blaine Kitchenware Case Study Answers 1. ABOUT THE COMPANY Blain Kitchenware, Inc. (BKI), founded inis a mid-sized producer of. Blaine Kitchenware Case Study Answers 1.
ABOUT THE COMPANY Blain Kitchenware, Inc. (BKI), founded inis a mid-sized producer of small appliances for residential kitchens. BKI has an approximate 10% market share of the $ billion U.S. market for small kitchen appliances, with 65% of sales originating from the US market.Download