Blaine Kitchenware

Blaine Kitchenw ar, Inc.: Capital Structure Team member: Yan Liang, Yufeng Miao, Ying Bi, Ziling Yao, James Dunne 1.Do you confide Blaines current capital structure and repair pop policies ar allow for? wherefore or why non? According to the current situation, we call up Blaines current capital structure and payout policies are non appropriate. capital structure? Blaine is currently over-liquid and under-levered. In this case, Blaines componentowners are suffering from the effects. Beca economic consumption Blaine is a public attach to with large maintain of its shares held by conservative family members, Blaine has huge financial surplus and causes sorry financial leverage. In other words, Blaine does not fully break its funds. Because the company is tot all(prenominal)y equity financed, there is no business shield. Excess cash will lower the return on equity and increase the cost of capital. A huge center of attention of cash would not only offer pos sible merchant bank incentives to buy Blaine with its own cash but as well 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 unremarkably call back the periodical dividend as an evaluation for a healthy company. Alth ough investors excise dividend as an indica! tor for a company to succeed, they also expect dividend will be paid ceaselessly at all stable or growing rate. scarcely 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 capital 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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