Corporate Finance and Ocean Carriers Essay

Submitted By Zhieh-Lor
Words: 2288
Pages: 10
Open Document
SureCut Shears, Inc. SureCut Shears is a household scissors and industrial shears manufacturer. The products were distributed by wholesalers throughout the US to speciality hardware and department stores while cheaper products distributed directly to large chains. The sales and profit growth fairly steadily since 1958 though there were severe competitors in the industry.
SureCut Shears held fairly sizable deposit balances in its principal banks and had sufficient capital to cover its permanent requirements over the immediate future. The company attempted to produce at an even rate throughout the year in order to accounted as good performance for borrow from bank. Each year during July to December, the company will borrow the capital to support their seasonal sales peak.
In June 1995, David Fischer, treasurer of SureCut Shears, credit $3.5 million from Hudson National Bank (HNB) to support its seasonal working capital and anticipated that loan will completely paid off by December at the same year. Pro forma income statement and balance sheets were shown to support the company request.
Mr. Fischer also request for approximately $1 million funding for the company’s plant modernization program in June 1996. This program is about half completed and it expected to save about $900,000 a year before taxes in manufacturing cost. However, the program required an expenditure of $6 million and estimated to complete by August 1995. In September 1995, $350,000 was requested in addition to the $3.5 million seasonal loan. While in January 1996, SureCuts Shears again request an additional short term loan to support the industry downturn. HNB had agreed with all funding requested by SureCut Shears.
Finally in April 1996, Surecut Shears informed HNB that the company would not be able to pay $1.25 million outstanding short-term loan balance due to the retailing recession and also the company’s inability to liquidate the loan. While agreeing to renew SureCut Shear’s outstanding loan, HNB would first explore if the the modernization program is the cause of SureCut Shears unable to repay its seasonal loan. Various profit and loss statements and balance sheets were examined over the previous 9 months to uncover the reason for the company loan repays inability. SureCut Shears actually did not grow rapidly and needed extra fund to support its unstable sales and the risk of excess inventories during the seasonal sales.

American Home Products Corporation
American Home Products Corporation is a leading company of prescription drugs, packaged drugs, food products, housewares and household products. AHP’s largest and most profitable business is prescription drugs. AHP is almost debt-free balance sheet and growing cash reserves. AHP had its own corporate culture: reticence; frugality and tight financial control; conservatism and risk-aversion; and the firm’s long-standing policy of centralizing complete authority in the chief executive.
Expenditures greater than $500 had to be personally approved by William Laporte. In addition, AHP often avoided risk of R&D and new-product development and introduction in the volatile drug industry. AHP often licensed its new product after other firms’ development or copied competitors’ new products. AHP was more utilized its marketing prowess to promote acquired products and product extensions. Finally, AHP is a management from the top company and their authority was interested in making money for the stockholders and minimizing costs. However, the managerial philosophy performed stable, consistent growth and profitability.
AHP’s sales, earnings, and dividends grew for 29 consecutive years through 1981. AHP’s ROE rose from 24% in 1960s to 30% in 1980s. AHP able to pay almost 60% of its annual earning as dividend and also able to value up its stock price AHP’s P/E ratio fell about 60% during the resignation of Laporte.
Major institutional investors mainly owned AHP’s stock. In addition, AHP was excess liquidity
Show More

Related Documents: Corporate Finance and Ocean Carriers Essay

Ocean Carriers FINAL Essay

Corporate Finance Assignment Group 2K Ocean Carriers Assumptions: Time and start point Assume that the current time (year 0) is the end of the year 2000. One year has 365 days. Revenue When the ship is scheduled for maintenance and repairs, hire rates cannot be earned. Therefore, the annual revenue equals the expected daily hire rates (forecasted by the consulting group) multiplied by the number of days operating, which is 365 days less the time allotted to maintenance and repairs in the respective…

Words 1218 - Pages 5

The Role of Advertising in Marketing Communications Essay

THE ROLE OF ADVERTISING IN MARKETING COMMUNICATIONS Marketing communications: Marketing communications are the means by which firms attempt to inform, persuade, and remind consumers – directly or indirectly – about the products and brands that they sell. In a sense, marketing communications represent the “voice” of the brand and are a means by which it can establish a dialogue and build relationships with consumers. Marketing communications perform several functions for consumers. Consumers can…

Words 9841 - Pages 40

Country Analysis GE Final 1 Essay

Economic Analysis Of Ethiopia A Case Study Submitted to: Professor Chartier In partial fulfillment of the MIB course Global Economics Hult International Business School Submitted by: Dajana Lisette Cudic Md H Dhrubo Paul Bertrand Ding Wang Stefanie Bartels Aravindbabu Kumar Boston, Massachusetts December 8, 2014 Contents EXECUTIVE SUMMARY 3 INTRODUCTION 4 TRENDS IN GROWTH, INFLATION, UNEMPLOYMENT AND DEBT 5 Growth Trends 5 Inflation Trends 5 Unemployment Trends 6 Debt Trends 6 CURRENT MONETARY…

Words 6461 - Pages 26

Business Law Notes

Chapter one Business Law Law is a set of rules, enforceable by the courts, which regulate the government of the state and governs the relationship between the state and its citizens and between one citizen and another. There are various ways in which the law may be classified; the most important are: * Public and private law * A) Public law is concerned with the relationship between the state and its citizens. Specialised areas are: 1. Constitutional law is concerned with the workings…

Words 34659 - Pages 139

Boeing Company Essay

Executive Summary The purpose of this report is to analyse the problems and issues faced by the Boeing company over history and provide a strategic plan for its future growth and development. At first this report gives an introduction on the background and the current situation of Boeing. Then it conducts a series of analysis on the factors that might influence the development of the company, they include: SWOT analysis to discover the company’s internal strengths and weaknesses together…

Words 8699 - Pages 35