Blaine Kitchenware Case Study Answers 1. ABOUT THE COMPANY Blain Kitchenware, Inc. (BKI), founded in , is a mid-sized producer of. View Notes – Blaine Kitchenware Case from FIN at DePaul University. Blaine Kitchenware Questions: 1) Do you believe that Blaines current capital structure. ABOUT THE COMPANY. Blain Kitchenware, Inc. (BKI), founded in , is a mid- sized producer of small appliances for residential kitchens. BKI has an.

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Blaine has an unlevered capital structure currently i.

There is a big question facing Blaine and that is why would their existing shareholders want to sell their equity back to the company? The justification can be drawn from the diminishing returns for the last three years. If this essay isn’t quite what you’re looking for, why not order your own custom Business essay, dissertation or piece of coursework that answers your exact question?

Joel Heilprin ; Timothy A Luehrman. Although this will involve the company raising a significant debt, this will also give them complete control to the promoters.

The debt capital has been procured at very less cost when compared to equity and hence the WACC has reduced from Acquirers could pay way less than they originally expect to buy out the firm. The caase has been earning profit and it should seek and endeavor further growth opportunities instead of returning it back to shareholders.

Order a custom essay Print this page Search again Word count: Although investors take dividend as an indicator for a company to succeed, they also expect dividend will be paid continuously at either stable or growing rate.


A surplus of cash lowers the return on equity and increases the cost of capital; also large amount bkaine cash may offer incentives to acquirer to and also decrease the enterprise value of Blaine.

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The return on equity will increase which will aid the family in better realizing value for their stake. Their management will have increased stakes, this will reduce their chance of being acquired and this will provide more dividends to their remaining shareholders.

In summary, in order for Blaine to keep its current payout policies, they must reduce numbers of outstanding shares throughout share repurchasing. 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:. Dividend payout ratio 0.

However, concluding whether an unlevered or a blaihe capital structure is appropriate for a company largely depends on the industry debt equity ratio i.

Blaine Kitchenware Inc Exhibits Stephanie Zepeda | Stephanie Zepeda –

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This is not a very healthy situation for a public company as the interest of the minority shareholders are sometimes not taken care of. Any orders placed kktchenware this time will blaind dealt with when we open again on 2nd January. Essay UK – http: Essay Caee offers professional custom essay writing, dissertation writing and coursework writing service. What are the primary advantages and disadvantages of such a move? However, the company must guard itself from getting over-levered.


Product details Share this page: 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. We are completely closed on Tuesday 1st January. Following is the operating results for the year when the capital structure is levered and unlevered. This shows that the company has been keen on less retention of money to further invest.

Cost of capital when the company is unlevered Ke It is a form of returning the money back to shareholders and the shareholders who are out there for investment purposes feel it a better option to stay their money invested blanie a growing company instead of receiving petty dividends. Accounting essays Architecture essays Business essays Coursework Economics essays Education essays Engineering essays English language essays English literature essays.

The management should use the available stduy and invest in attractive investments. My account New to The Case Centre? Would you be in favor of it as a non-family shareholder? How would such a buyback affect Blaine?

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Medicine essays Miscellaneous essays Psychology essays Religious studies essays Science essays Sociology essays Essays menu. Interest 0 Earnings Before Tax 77, 74, Less: According to their current situation we do not think their current capital structure and payout policies are appropriate.

Finance, Accounting and Control. Cost of capital when the company is unlevered Dividend per share D1 0.