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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We are completely closed on Tuesday 1st January. 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. They should bpaine consider things such their acquisition plans, their earnings per share and their dividend per share, ownership structure, capital structure and of course the reputation of the company in the market after the buyback.

Using a perfect leverage is always beneficial for a company as it allows to decrease the cost of capital. There are UK writers just like me on hand, waiting to help blaind. Joel Heilprin ; Timothy A Luehrman. My account New to The Case Centre? Cost of capital when the company is unlevered Dividend per share D1 0. 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.


About this item Settings Related products Abstract A diversified mid-sized manufacturer of kitchen tools contemplates a stock repurchase in response to an unsolicited takeover.

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Finance, Accounting and Control. Keep up to date with email updates Pricing Shipping options Terms of business What’s available from us? 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.

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.

The Case Centre is a not-for-profit company limited by guarantee, registered in England No and entered in the Register of Charities No How would such a buyback affect Blaine?

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In summary, in order for Blaine to keep its current payout policies, they must reduce numbers of outstanding shares throughout share repurchasing. Since they are totally equity financed, there is no tax shield. Why or why not?

Medicine essays Miscellaneous essays Psychology essays Religious studies essays Science essays Sociology essays Essays menu. The return on equity will increase which stuvy aid the family in better realizing value for their stake. 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 compare it with the cost of equity.


Order a custom essay Print this page Search again Word count: However, concluding whether an unlevered or a levered capital structure glaine appropriate for a company largely depends on the industry debt equity ratio i.

In other words, Blaine does not fully utilize its funds. As a non family member, the stock repurchase will make me more skeptical because the shares owned by the cqse is rising exponentially and hence making it more dominant. Blaine kihchenware an unlevered capital structure currently i. The payout ratio of the company has been increasingly increasing for the past three years.

Cost of capital when the company is unlevered Ke Each of us is qualified to a high level in our area of expertise, and we can write you a fully researched, fully referenced complete original answer to your essay question.

Dividend payout ratio 0. We have not been given the seperate data for equity share capital and Retained Earnings. The Case Centre is dedicated to advancing the case method worldwide, sharing knowledge, wisdom and experience to inspire and transform business education across the cxse.