Business risk of GSAP they are going to buy: that it will not fail o Business risk= more business risk means more variability in operating profit which means a higher beta so adjust the Beta coefficient to match it with the level of financial risk incurred by the company. • Beta: Sterling’s proposed acquisition is 0.99 (beta is leveraged on the debt/equity ratio) [Exhibit 7] • Growth opportunities were limited and its business was under constant pressure • The company’s annual sales volume (in units) had increased by less than 1% per year, because of weak growth in overall demand and other company competition, which gives consumers the ability to choose other products • Business risk of buying at $265 million: relevantly low (where there …show more content…
• If PE ratios show how much growth (Montagne is growing better and faster) o Sterling expenses are going more than depreciation which is lower than Montagne o Expected to have Montagne PE to be higher (not only by a 0.2 difference) • PE of Montagne is so low and PE of Sterling is so high because it is over valued o Very diversified with beta • [Exhibit 1] Sterling’s operating expenses and commodities costs = rising faster than inflation rate: therefore more pressure on business profits Financial risk: by looking at the trends of coverage ratios, there is medium financial risk because Sterling is doing the borrowing o The higher working capital rate of Montagne Medical indicated financial risk in the Medicare/Healthcare market o Receivables are outstanding longer and there are greater risks of write offs for future o Inventory rates are higher and should be financially controlled/overlooked Beta [Exhibit 3]: • Beta for division: they are buying which is not the same for overall (diversified business) • Do not have returns for the division they are buying in • Division doesn’t trade in the market (doesn’t have a market price)- main challenge • Value of beta = 0.99 • Market premium = 5.0% • Risk free rate = …show more content…
Recommendations: • I would suggest (from an analytical perspective) getting the terminal value to estimate the expected value of unit acquisition with 2.2% growth rate o Also suggest not to acquire Montagne (business and financial risk on Sterling Company) • Sterling’s management should focus on the acquisition of Germicidal, Sanitation, and Antiseptic product division of Montagne Medical= high potentials of synergies (market for germicidal, sanitation and antiseptic products for use is growing fast • Device a monthly liquidity plan, keep contacts from Montagne Medical, and increase cash/short term bank payables after purchase o Risk in short term liquidity increases because higher working capital Explain why you would either make this acquisition or pass it up: • Valuation: free cash flow: EBIT + (1- tax rate) • Value of the unit acquisition = $ 171 million • It will not be worthwhile or successful (financially) for Sterling to acquire Montagne because its calculated value is less than purchase price • Discounted cash flows for the unit acquisition (without the option of capacity expansion): o Unit of the Montagne is not worth $265 million o Calculated worth of the unit is to be less than the negotiated value of $265
In the court case of Montanile v. Board of Trustees of the National Elevator Industry Health Benefit Plan, the Employee Retirement Income Security Act of 1974 was used to determine if an employee wrongfully received funds from a third party after receiving funds from the National Elevator Industry Health Benefits plan. In the court case, the petitioner Robert Montanile was driving when he was struck by a drunk driver resulting in Mr. Montanile be severely injured. The health benefit plan paid upwards in of $121,000 in medical expenses for Mr. Montanile. In order to receive such funds, Mr. Montanile was required to sign a reimbursement agreement reaffirming his obligation to reimburse the plan from any recovery he obtained "as a result of any legal action or settlement or otherwise. After exiting the hospital Mr. Monanile sought legal action against the drunk
Yes, the Tennants did settle, Nathaniel writes, "The tenant settled." He further states, "The firm would receive its contingency fee. The whole business might have ended right there. But Billot was not satisfied" (Rich 11) Even though the Tennants settled he went on to pursue a class action lawsuit against
Introduction McCloy considered the validity of provisions in Election Funding, Expenditures and Disclosed act 1981 (NSW) ("the EFED Act.") and it has been accepted that restrictions on donations to candidates and parties is constitutional. This paper analyses the implications of the McCloy for the implied freedom of political communication.
Introduction This case study of Vehar v. Cole National Group is a case where the plaintiff, Wendy Vehar, accused Cole National Group of sex discrimination claiming that as a female she was not being the same wage as a male for performing the same duties. Additionally this study will determine if the plaintiff established a valid prima facie as well as if there was a basis for equal work. Next, what factors did the appeals court base its decision and why is the other-than-sex factor that is presented by the employer insufficient to avoid a trial? Finally, what should the employer have done differently to ensure this type of situation did not occur in their business?
Introduction Blake Goodwin is the CEO of Goodwin Wealth Management. He was deciding to hire a consultant to make an assessment of his situation. Three large companies had expressed interest to acquire Goodwin Wealth Management. In the fall 2007, Ice Financial Income Fund, First Canadian Band, and Brawn Financial Corporation were the potential suitors and they had made offers to acquire the company. Blake Goodwin had to decide whether to sell the company and if he sold it, which buyer was the best one.
Facts Angelique Lavallee killed her common law partner, Kevin Rust, by shooting him in the back of the head late one night after a party at their home. Lavallee was frequently a victim of physical abuse in the relationship, defining her as a battered woman. She made several trips to the hospital for injuries, such as bruises, fractured nose, black eye and multiple contusions, excused by unbelievable reasons. Witnesses testified to seeing and hearing the abuse committed by Rust onto Lavallee prior times to the party as well as at the party that evening. The shooting occurred subsequent to an argument that Lavallee and the deceased had been having in the upper level of the home, after Rust had reportedly told Lavallee to kill him or he would
TO: Dr. Jim Turner FROM: Tyler Mead DATE: October 20, 2015 SUBJECT: New England Seafood Company Risk Analysis Overview: Accompanying this memo is a risk analysis I have conducted for New England Seafood Company. The risk analysis I have conducted will show which weighted average cost of capital would be best to use in evaluating the project along with how New England Seafood Company could utilize the land if the project is accepted. A 10% cost of capital will result in a positive net present value but the coefficient of variation will be much higher than New England’s average coefficient of variation. A lower or higher cost of capital could under or over value the project and risks involved.
In 2013, the Supreme Court case Moncrieffe v. Holder refuses a Board of Immigration Appeals to removal from the United States of a lawful permanent resident based on a long term criminal conviction related to sole possession of small amounts of marijuana. The case finally made it all the way to the Supreme Court, which is considered a rather technical question of the interpretation of the U.S Immigration laws. Local police departments have long been accused of profiling Hispanic, African-Americans, and other minorities of race in law enforcement activities, including run of the mill traffic stop. Critics fear that immigration enforcement by state and local authorities will lead to increase of racism. Many Americans have shown concerns with the implementation of racist discrimination of the U.S immigration laws by state police agencies and local authorities.
The claimant has a past medical history significant for an acute depression, asthma, bilateral high-frequency hearing loss, diabetes mellitus type 2, and hypertension. The claimant had an emergency room visit on 05/22/2017 due to left leg cramping. It was noted that she had multiple symptoms including a headache, generalized weakness, arm tightness, unproductive cough, frequent bowel movement, and nausea. Laboratory results showed elevated glucose at 200 and low potassium level at 3.3.
Using the formula Future value = Present value * exp(rt) I can calculate the future value for the population of the state Georgia. 27.821 million= 10.235 million * exp (0.1*10) is the formula to calculate the future value of Georgia using a rate of growth of 10% and a time of 10 years. 55.643 million= 10.235 million * exp (0.1*20) is the value if the time changed to 20 years. 83.464 million= 10.235 million * exp (0.1*30) is the future value of population at 30 years.
In this case questioning workplace harassment in terms of sexual discrimination and its prevalence to Title VII of the Civil Rights Act of 1964, Joseph Oncale v. Sundowner Offshore Services distinguishes whether or not discrimination can occur within the same sex. Joseph Oncale, a male, filed a complaint against his employer, Sundowner Offshore Services, Inc. The petitioner was working at one of respondent’s service stations and he was part of an eight men team. In the complaint, Mr. Oncale is alleging that he was sexually harassed by his co-workers John Lyons, Danny Pippen, and Brandon Johnson.
You Will Be The Judge Facts: The case involves a 12 year old child named Griffin Grimbly who told the teacher that he was beaten with a clothesline by his father Mr.Gimli. In court, the Mr.Gimli argued that he was devoted to Christian and was following the Biblical injunction on child rearing, “Spare the rod and spoil the child”, as well as arguing that s 43 of the criminal code gives parents the right to use “reasonable force” in disciplining their children. Issue: Is Mr. Grimbly is guilty of or not guilty of assault ? Held: Mr.Grimbly is guilty of assault.
Porter’s article has strong analysis and provides persuasive examples to support his argument. He carefully explains the five forces and demonstrates how they affect the competition in business. For example, when discussing about rivalry among existing competitors, Porter briefly mentions about different forms of rivalries and its intensity. After that, he analyzes the situations that lead to different level of intensity in rivalry carefully. Porter illustrates that “ The intensity of rivalry is greatest if: Competitors are numerous or are roughly equal in size and power…Industry growth is slow…
Weighted average cost of capital for Marriot Corporation: In order to determine cost of capital, first we need to find out cost of equity and cost of debt. For determining the cost of equity we need to determine the beta for the target leverage ratio. According to the information provided by exhibit 3 equity beta is estimated at 0.97 when equity-to-total capital ratio is 0.59. Therefore we need to find unlevered beta value so that we can find firm’s equity beta at the desired leverage ratio as mentioned in Table A. Tax bracket of 44% is used based on ratio of income taxes to income before income taxes (175.9/398.9) in Exhibit 1.
The biggest financial worry is the presence of its challengers in the business. Also, the company has to research the goods, business approaches, and other characteristics of all possible