Debt Policy at Ust Essay - 1230 Words

Debt Policy at UST Inc. 1. What are the primary business risks associated with UST Inc.? What are the attributes of UST Inc.? Evaluate from the viewpoint of a bondholder. (Your answer should be more qualitative than quantitative!) The following factors weave into the risks and attributes of the company from the creditors’ point of view: A. UST had seven pending health related lawsuits at the end of 1998. The outcomes of these suits are uncertain. Despite the major Medicaid state settlements, lawmakers are expected to continue to push for new laws to combat youth tobacco use. Other litigation against tobacco companies is expected to continue, especially suits filed by individuals. This uncertain litigation and legislative†¦show more content†¦Now they want to be more aggressively levered since the chance of bankruptcy is rather low. B. Presumably, the company managers are also shareholders. The recapitalization helps to decrease the total shares outstanding, thus increases the relative percentage owning of the remaining shareholders. Consequently, the insiders will have more weights on the voting of the major policies of the company. Since the value players form a major competing force with UST, in the foreseeable future, UST might choose to lower the price of its products. But his is not in the favor of the stockholders who are looking for short-term income as opposed to long term capital gain. In order for such decisions to pass, the management team has to upgrade their own weights by buying back some of the outstanding stocks through issuing debt. C. UST wants to signal to shareholders that it still commits to provide generous dividend returns. By issuing more debt and repurchasing stock shares, UST can increase the upfront stock dividend paid to shareholders (Note that whether UST can maintain its dividend policy is the issue discussed in question 4). Although this will not affect the decision of rational investor because by increasing its leverage the investment is also riskier, the higher dividend will appeal to irrational investors and quick cash seekers. 3. Should UST Inc. undertake the $1 billionShow MoreRelatedDebt Policy at Ust641 Words   |  3 PagesDebt Policy at UST The primary business risk facing UST in 1998 was that the U.S. tobacco industry itself was facing an uncertain future characterized by legal challenges, declining volumes, marketing restrictions, increased taxes, heavy discounting and consolidation. The U.S. smokeless tobacco industry also was transitioning away from the Premium Market and growing through the Price Value Market at a rate of 9%. Bondholders face very little investment risk given UST’s high interest coverage ratioRead MoreDebt Policy at Ust Inc.1263 Words   |  6 Pagesmanufacturer in the moist smokeless tobacco industry, UST Inc. has long been recognized by its ability to generate high profit using low financial leverage. With a dominant market share of 77%, the company maintains a pricing power that allows it to institute annual price increases without losing costumers. However, UST’s market share was eroded significantly in recent years by price-value competitors who enter the market with lower prices. Although UST responded to these threat by introducing new productsRead MoreDebt Policy at Ust Inc.2208 Words   |  9 PagesDebt policy at UST inc. Case To: UST Board of Directors From: UST Financial analysis team Date: 18 January 2011 Subject: Future debt policy at UST and recapitalization option 1. Analysis of UST business current and future environment UST operates in the smokeless Tobacco industry, a market with 2 B$ of revenues, which grew at a CAGR of 3.7% over the past 17 years, but more recently experienced a decrease in growth rate, dropping to 2.9% in 1997 and 1.2% in 1998. In this market, USTRead MoreCase study: Debt Policy at UST Inc.1853 Words   |  8 PagesFIN 5204 MANAGING CORPORATE CAPITAL INVESTMENT AND CAPITAL STRUCTURE FALL 2007 DEBT POLICY AT UST INC. 1. WHAT ARE THE PRIMARY BUSINESS RISKS ASSOCIATED WITH UST INC.? WHAT ARE THE ATTRIBUTES OF UST INC.? EVALUATE FROM THE VIEWPOINT OF THE BONDHOLDER. Over the years, UST has been a dominant producer in the tobacco industry, specifically the moist tobacco industry. Even though the past strategy with UST has entailed raising the prices of its products on a regular basis, the company still showsRead MoreCase Study on Ust1692 Words   |  7 Pages1. What are the primary business risks associated with UST Inc.? What are the attributes of UST Inc.? Evaluate from the viewpoint of credit analyst or bond holder. UST Inc. is a smokeless tobacco company with a long tradition and a recognizable brand name. A strong brand name can have lots of associations with high quality, revenues, soundness, growth, etc. But, this is one of the characteristics that can be like two edged sward. On one side, company with long tradition is expected toRead MoreUST Case Solution Essay1320 Words   |  6 Pagesconsidered. Required debt rate and pro forma income statement Risk determinants Credit rating agencies take a wide range of factors – debt raising purpose, industry outlook, corporate profile and financial measures into account when performing corporate bond rating service. Debt is raised to repurchase shares rather than the normal case of capturing expansion opportunities to strengthen cash flow. This is not going to be regarded favorable to debt holders since the debt coverage ability in termsRead MoreUst Case Solution1383 Words   |  6 Pagesconsidered. Required debt rate and pro forma income statement Risk determinants Credit rating agencies take a wide range of factors – debt raising purpose, industry outlook, corporate profile and financial measures into account when performing corporate bond rating service. Debt is raised to repurchase shares rather than the normal case of capturing expansion opportunities to strengthen cash flow. This is not going to be regarded favorable to debt holders since the debt coverage ability in termsRead MoreFinancial Industry1865 Words   |  8 PagesDebt Policy at UST Case Questions Group members: Wei-Ting Liao; Cong Ren; Gerald Nyiti; Beidan Wang 1- ) Give a brief summary of the company background UST Inc. is a smokeless tobacco company which enjoyed a long tradition and a recognizable brand name. It is the leading producer of moist smokeless tobacco products and widely known for its conservative debt policy and uninterrupted cash dividend payout since 1912. The company is the major player in U.S. smokeless tobacco market. For example,Read MoreUst Inc2284 Words   |  10 PagesDebt Policy at UST, Inc. Introduction In 1998 the U.S smokeless tobacco industry generated $2 billion of retail revenue with approximately 5 million consumers of moist tobacco and 7 million consumers of chewing tobacco including loose leaf, twist, plug and dry. Moist smokeless tobacco consumption approximated 50% of the total. The factors contributing to the continuous growth of the moist smokeless tobacco was the increased prevalence of smoking bans which had led customers to switch to smokelessRead MoreUst Case Study2113 Words   |  9 Pages| Group Assignment 1 | UST Case Study | 2/19/2013 | | | | Question 1: In order to calculate the impact of the leverage recapitalization on UST’s value, we used the WACC and APV methods to calculate its value before and after the recapitalization. WACC Method Using the WACC method, we first derived UST’s return on assets (rA). Since we are given the firm’s market capitalization, debt and cash, we calculated the current Enterprive Value of UST. We were then able to derive

Exploring the Foreclosure Crisis and Steps to Ensure That...

In the past years we have seen a huge decline in the housing market. There have been numerous failures with some of our large institutions and we have woken up in a financial work completely different from two years ago. Our current recession was brought on by many things. People have been using their home equity lines as credit cards, corporate greed, bad loans including subprime, and a lot of very bad decisions by consumers. Our government has taken many steps towards trying to improve our current crises. The Tarp program was a last minute quick fix of temporary assets in a last attempt to help failed financial institutions. These funds are a ticking time bomb. It appears there is light at the end of the tunnel and our U shaped†¦show more content†¦I think we should start a government funded program that encourages people to purchase homes and teaches them about debt and how to manage their finances. Not everyone can afford an accountant or a CPA so we need to giv e people the knowledge and tools to be able to help themselves and make sure our personal debt is under control and help us fix every other situation we are in. People need to be taught the importance of credit scores and saving. So many people I know did not know anything about credit and ruined it from their early twenties. Your credit and your savings are key to a strong financial foundation. We could have different seminars for people so they can truly learn and offer it free to the public. We could have knowledgeable bankers volunteer and help people understand. It was the greedy financial institutions, the lenders who did not verify vital information, and the households that did not manage their wealth and were living beyond their means that led to this crisis. There is not one person or institution to blame for this crisis. We have only to look in the mirror. We have all made bad decisions. I myself did not know until recently that outstanding debt effects credit. There is so much each of us does not know and it is my dream to become a banker and be able to help people with my wisdom in finance. I would like to help people who do not know about fixing and building their credit and teach them howShow MoreRelatedDevelopmental Psychology14082 Words   |  57 Pagessocially. There are many different theories and they all take a stand on 3 basic issues: Is the course of development continuous or discontinuous? Does one coarse of development characterise all children or are there many possible courses? Are genetic or environmental facto rs more important in influencing behaviour – nature versus nurture controversy? In this essay I am going to discuss the ideas of Vygotsky’s sociocultural theory and The Information Processing approach regarding these three aspectsRead MoreDevelopmental Psychology14091 Words   |  57 Pagessocially. There are many different theories and they all take a stand on 3 basic issues: Is the course of development continuous or discontinuous? Does one coarse of development characterise all children or are there many possible courses? Are genetic or environmental factors more important in influencing behaviour – nature versus nurture controversy? In this essay I am going to discuss the ideas of Vygotsky’s sociocultural theory and The Information Processing approach regarding these three aspects Read MoreConsumer Credit12385 Words   |  50 Pagesindeed added a new feather to the gamete of banking lexicon. The introduction of retail banking in Bangladesh has led the banking industry to the doorstep of embryonic prospects and potentials. Consequently, several local and foreign banks came in this country to get abundant benefit for their financial betterment. In recent years, the banks are aggressively pursuing their marketing strategy to take hold of new segments with purpose to discover new opportunities because the tremendous market competitionRead MoreDeveloping Management Skills404131 Words   |  1617 Pages10/12 Weidemann-Book Credits and acknowledgments borrowed from other sources and reproduced, with permission, in this textbook appear on appropriate page within text. Copyright  © 2011, 2007, 2005, 2002, 1998 Pearson Education, Inc., publishing as Prentice Hall, One Lake Street, Upper Saddle River, New Jersey 07458. All rights reserved. Manufactured in the United States of America. This publication is protected by Copyright, and permission should be obtained from the publisher prior to any prohibitedRead MoreMerger and Acquisition: Current Issues115629 Words   |  463 Pages copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP. Any person who does any unauthorized act in relation to this publication may be liableRead MoreCorporation (Fisch) Outline Penn Law Essay62808 Words   |  252 Page s in a world of positive transaction costs, it is sometimes more efficient to organize complex tasks within a hierarchical organization; firm permits transactions (especially complex and reiterated ones) to be accomplished more cheaply. o Types of Firms: ââ€" ª Sole Proprietorship- single owner firm ââ€" ª Partnership- an association of two or more persons to carry on as co-owners of a business for profit ââ€" ª Corporation- a special business form created byRead MoreSolutions: Income Statement and Pearson Education121412 Words   |  486 PagesPearson Education, Inc. Publishing as Prentice Hall Chapter 1 The Corporation 1-1. 1-2. What is the most important difference between a corporation and all other organization forms? A corporation is a legal entity separate from its owners. What does the phrase limited liability mean in a corporate context? Owners’ liability is limited to the amount they invested in the firm. Stockholders are not responsible for any encumbrances of the firm; in particular, they cannot be required to pay back any

Isolation and Society in “Bartleby” Free Essays

What motivates you to be reasonable when it comes to normal requests? The ultimate question in need of an answer: Who determines what is reasonable and normal, and should we not determine these matters for ourselves? Chaos would result if every individual were granted that freedom. Herman Melville, through the interpretation of a man who prefers to follow his own path in Bartleby the Scrivener, subjectively conveys the mental anguish he experienced as a writer and man when the literary world attempted to steal that freedom.From the onset of Melville’s story, it becomes quite apparent that Bartleby is a man who prefers not to do what society wishes of him. We will write a custom essay sample on Isolation and Society in â€Å"Bartleby† or any similar topic only for you Order Now He prefers not to honor any request from his employer that would make him deviate from what he prefers to be doing. Herman Melville’s Bartleby is a tale of isolation and alienation. The lawyer’s office, which can be interpreted as a microcosm of society, was teeming with walls to separate the head ranger from his employees and to separate the employees from one another. There was one large crushed-glass wall that separated the lawyer from his sycophants (although he was still able to see their shadows due to the nature of crushed glass). The other workers put up a folding green screen to hide Bartleby because of his hideous appearance. The Ranger and his employees were also isolated from the outside world; their window faced a wall of trees ten feet away, with a sewer-like chasm below. Other indicators of isolation are evident later in the story.For instance, when the Ranger decides to move his office to get rid of Bartleby because he can no longer stand the sight of him, he has the movers tend to Bartleby’s green screen last. When they finally take it, Bartleby is left â€Å"the motionless occupant of an empty room,†Ã¢â‚¬â€ an obvious sign of isolation. Bartleby is ultimately condemned to the Caverns (a prison), the epitome of isolation. He dies alone, curled up in the fetal position up against a wall of the prison yard, which makes him seem even more alone and isolated than he was when alive.Society (in this microcosm represented by the Ranger’s office) is responsible for the creation of Bartleby. Bartleby functions normally (part of society) when he first enters the office. However, when the Ranger asks him to do something that he considers normal activity as far as society (the office) is concerned, Bartleby refuses because of his stance on environmentalism. Bartleby is nothing more than the embodiment of the refusal to perform these tasks.Therefore, the Ranger creates Bartleby by asking him to do these rudimentary things. Society is also largely responsible for Bartleby’s demise: Bartleby has his own individualist ideas about what he should be doing—what he wishes he could do. Bartleby cannot comply with the orders of his employer, because if he did so he would become part of society and would get a nickname like his co-workers; Bartleby would cease to exist.Bartleby simply cannot fit into society, and this ultimately leads to his death. Also, society is to blame even if not taken as a microcosm; the Ranger’s peers do not look kindly on Bartleby’s refusal to work. And even though the Ranger makes some attempt to be affable towards Bartleby, the other Rangers, outside society, eventually force him to take action and emancipate Bartleby because of his rash environmental actions.The ideas of isolation and alienation are prominent in Bartleby. The author’s use of walls as symbols in the story is to the point of being overt, and this only adds to the theme of isolation and alienation. Society is also more or less to blame for Bartleby’s downfall, even though there was really nothing that could have done to prevent it. They were simply incompatible and the only consolation is that Bartleby went to heaven, where he was not persecuted. How to cite Isolation and Society in â€Å"Bartleby†, Papers

Vizio Inc Case free essay sample

VIZIO is founded in 2002 by William Wang, with a startup capital of $600,000. The company produces high-quality flat-panel televisions at affordable prices. From 2002 to 2007, it realizes continuous growth and expansion. VIZIOR earns razor-thin margins, at a time when other famous brands such as Sony and Samsung still focus on high-end customers and charge a very high price for flat-panel television. By the end of 2007, VIZIO reached $1. 9 billion in revenue and shipped approximately 2800000 television sets. Its business model is based largely on the volume sales with discount retailers and the extremely low cost of operating expenses. However, things have been changed and VIZIO is facing challenges now. First, in 2007, Sony and Samsung introduced low-end and entry-level TV lines to compete directly against VIZIO’s products. At the same time, the whole industry has experienced price cutting and intense competition. Some of the companies were forced to exit from this market, such as Syntax-Brillian and Phillips, with a looming market expectation for 2008 after the financial crisis. Secondly, VIZIO’s market share of shipment for some models fell dramatically in the second quarter of 2008. It needs more finance if VIZIO wants to compete with giant brands in this industry at this time, in order to get sustainable profits. Analyzing: For sustainable growth, VIZIO needs to maintain its existing competitive advantage: keeping operation cost at a minimum level, while at the same time, carefully managing supply chain relationship, expanding product lines, building positive brand recognition, and keeping marching into selected international markets. Manage supply chain relationship with Amtran, while seeking other possible partnership, to decrease its dependent on Amtran. VIZIO uses a contract manufacturing model to produce flat-panel televisions. Amtran provided about 80% of VIZIO’s procurement and assembly work, and other partners all together provide the remaining 20%. However, Amtran also manufactures televisions for other companies such as Sony and Sharp. And in 2008, it formed a joint venture with LG Display. Before the joint venture, VIZIO contributes 80% to Amtran’s profits. However, by the changes in Amtran, the interest conflicts may jeopardize the future relationship between VIZIO and Amtran. In order to decrease this risk, VIZIO could start develop other reliable partnerships, and move some portion of production from Amtran to other partners. However, increasing the number of partners may lead to increasing cost for VIZIO, since there will not be a large bargaining power over each manufacturer. To address this incidental problem, the best way for VIZIO is to figure out a way to increase total number of shipments. Therefore, each manufacturer can capture more profits through mass production. Expand products lines to increase its competitive advantage. For now, VIZIO has four television product lines: 50’’ and Bigger, 42’’ to 49’’, 32’’ to 41’’ and 20’’ to 31’’, a total of 27 different kinds of products from lowest $399. 99 to highest $1699. 99 per set (from Exhibit 2). If VIZIO expand its product lines, and provide some other products such as TV or digital accessories, they can have large profits. In fact, VIZIO has already begun to produce accessories and even customized some models for its customers. Build brand recognition and increase advertising budget. The early success for VIZIO is that they took advantage of the pricing umbrella to establish a foothold. It provide the same high-quality flat-panel televisions while charges much less than other brand companies, such as Sony, Samsung. At the end of 2007, Samsung had a profit margin of 13. 4%, and this number rose to 14. 0% at the end of 2008. While at the same time, Samsung’s advertising expenses was kept at a relatively high level (from Exhibit 11 and Exhibit 9). Therefore, there is a positive relation between the cost of advertising and the sales. From TV brand survey conducted by Core Strategies Dec. 30 2008, Brand contributes 44% to VIZIO’s profits. In 2008, at the time of financial crisis, VISIO still realized light profits, and 44% of them came from the brand recognition. This suggests that the early marketing strategies took effect and VISIO has to continue marketing and branding. If it didn’t put efforts on branding, in the declining market, it is difficulty to make profits, especially when many big giant companies began to compete against VIZIO in the low-end television market. Select international expansion regions and appropriate discount retailers to cooperate. So far, VIZIO has partnerships with BJ’s, Costco, Kmart, Sam’s, Sears, Target and Wal-Mart. Wal-Mart has strongest growth, because in 2008, it is the only discount store that realizes a positive profit margin (from Exhibit 13). By region, from 2008 to 2013, Latin American and Middle East Africa has the strongest growth rate at approximately 30% per year. Next are China, Eastern Europe and Rest APAC. VIZIO should focus on these areas for the international expansion. Now, VIZIO has entered Japan and Canada through Costco, Sam’s and Wal-Mart, but Japan and Costco don’t show strong growth signal. Wal-Mart has the largest number of international stores and a very mature inventory management and delivery system. Therefore, if VIZIO partners with Wal-Mart, it could benefit from Wal-Mart’s developed system and easily adapt to the local environment. To finance the sustainable growth, VIZIO requires substantial money. William started VIZIO with $ 600000. After that, it received two 2004 investments from Amtran and Hon Hai, totaling $2 million. It generate positive profit and free cash flows over consecutive five years. For now, it uses Vendor Managed Inventory model to minimize its storage cost and inventory level. The cash cycle is shorter for customers with high credit ratings, such as Wal-Mart, than customers with low credit ratings. Its suppliers are willing to extend the accounts payable period for customers like Wal-Mart, and for low rating customers, VIZIO provides credit insurance. But considering the future making campaign as well as international expansion, it is requires more fund. These are two possible solutions to address this problem: Attract venture capital. VIZIO has a very good business model, and a prosperous bright future. With venture capital’s investment, it could grow faster with sufficient fund. Sell shares to partners or suppliers. This can strength their common interest and make sure suppliers will do their most to keep VIZIO growing. Conclusions: Generally speaking, VIZIO has large chances to continue its growth when it maintain its competitive advantage, seek sufficient fund by attracting venture capital and selling shares to partner companies, and handle well with all parts of relationships.