Blaine Kitchenware

Blaine Kitchenw ar, Inc.: Capital Structure Team member: Yan Liang, Yufeng Miao, Ying Bi, Ziling Yao, James Dunne 1.Do you cogitate Blaines current capital structure and afford reveal policies be abstract? wherefore or why non? According to the current situation, we intend Blaines current capital structure and payout policies are not appropriate. capital structure? Blaine is currently over-liquid and under-levered. In this case, Blaines componentowners are suffering from the effects. Beca determination Blaine is a public confederacy with large regulate of its shares held by conservative family members, Blaine has huge financial surplus and causes high-risk financial leverage. In other words, Blaine does not fully legislate its funds. Because the company is tot all(prenominal)y equity financed, there is no labor shield. Excess cash will lower the return on equity and increase the cost of capital. A huge concenter of cash would not only offer possible mer chant bank incentives to buy Blaine with its own cash but in addition return the enterprise value of Blaine. In other words, acquirers could pay means less than they originally expect to buy out this family-based family. payout policies? Regarding the payout policies, the dividend payout proportion from 2004 to 2007 is 35%, 43.6% and 52.9%.

However, the managements goal is to maximize the shareholders value, rather than paying dividend. Management should use all available cash in attractive investments. Investors normally call back the periodical dividend as an evaluation for a healthy company. Although inves tors excise dividend as an indicator for a ! company to succeed, they also expect dividend will be paid unendingly at all stable or growing rate. entirely BKI knows that the recent move in BKIs payout ratio was unsustainable. In state for Blaine to happen its current payout policies, Blaine has to reduce numbers of smashing shares throughout share repurchasing. In this case, the payout ratio would decrease as expected. 2. Should Dubinski recommend a large share...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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