Blaine Kitchenware Case Study Answers 1. BKI , founded in , is a mid-sized producer of. Blaine Kitchenware Questions: 1 Do you believe that Blaines current capital structure. Blain Kitchenware, Inc. BKI , founded in , is a mid- sized producer of small appliances for residential kitchens. BKI has an. It is evident that the cost of capital has reduced when the company decided to go for share kitchenwage using the surplus cash and debenture issue. If you are the original author of this content and no longer wish to have it published on our website then please click on the link below to request removal:. Medicine essays Miscellaneous essays Psychology essays Religious studies essays Science essays Sociology essays Essays menu. Debt being a cheap source of kitchenwaree and given the industry standards confirming the availability of the debt as well as the conformity by the rivals in subscribing to the debt capital, it seems wise to have a levered capital structure instead of having a completely unlevered one as it would have affected the cost of capital of the company. Essay UK offers professional custom essay writing, dissertation writing and coursework writing service. They also have to consider of the effect of the repurchase on various factors like the risks involved in raising a debt especially when they are large, very conservative and debt free. Access this item You must be logged in to access preview copies. Seeing the industry debt equity ratio, the company has kept itself unlevered and this was a bit costly as the cost of debenture is fast cheaper if we cas it with the cost of equity. The company must determine the optimal debt capacity and capital structure, and subsequently estimate the resulting change in firm value and stock price. According to their current situation we do not think their current capital structure and payout policies are appropriate. Another scenario is to etudy buy-back the market float. The Case Centre is dedicated to advancing the case method worldwide, sharing knowledge, wisdom and experience to inspire and transform business education across the globe. In summary, in order for Blaine to keep its current payout policies, they must reduce numbers of outstanding shares throughout share repurchasing. This page has approximately words. Dividend payout ratio 0. The company has been earning less profits and hence it is of the opinion of distributing the profits to shareholders instead of retaining it for further investments. Using a perfect leverage is always beneficial for a casr as it allows to decrease the cost of capital. Joel Heilprin ; Timothy A Luehrman. A surplus of cash lowers the return on equity and increases the cost of capital; also large amount of cash may offer incentives to acquirer to and also decrease the enterprise value of Blaine. We are completely closed on Tuesday 1st January. The Case Centre is a not-for-profit company limited by guarantee, registered in England No and entered in the Register of Charities No Blaine has an unlevered capital structure currently i. Since they are totally equity financed, there is no tax cass. Just complete our simple order iitchenware and you could have your customised Business work in your email box, in as little as 3 hours. Go to advanced search. All fields Reference no. By continuing to use our site you consent to the use of cookies as described in our privacy policy unless you have disabled them. The management should use the available cash and invest in attractive investments. What kitchenwwre the primary advantages and disadvantages of such a move? 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. Teaching note supplement software. Essay UK — http: About this resource This Business essay was submitted to us by a student in sutdy to help you with your studies. Finance, Accounting and Control. Our work is high quality, plagiarism-free and delivered on time. 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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