Finance and New Product Line
Questions for Case studies
Ceres Gardening Company
Management related questions: 1. What have been the key factors in company’s growth? 2. How has the stock market responded to the company’s performance? Why? 3. What should Ceres’s strategic plan be, given the trends in the organic gardening market? 4. How would you evaluate Ceres’s marketing efforts? Should the GetCeres ™ program be expanded? Why or why not/ 5. What potential financial risks does Ceres face as it crafts its strategy for 2007? 6. If you were the CFO, how would you approach the issue of crafting a marketing plan for 2007?
Financial analysis 1. How has the company grown? What is its basic strategy and how has this evolved? 2. Is Ceres financially healthy? What parts of the financial statement might be a reason for confidence or cause of concern?
Blaine Kitchenware, Inc. 1. Do you believe Blaine’s current capital structure and payout policies are appropriate? Why or why not? 2. Should Dubinski recommend a large share repurchase to Blaine’s board? What are the primary advantages and disadvantages of such a move? 3. Consider the following share repurchase proposal: Blaine will use $209 million of cash from its balance sheet and $50 million in new debt-bearing interest at the rate of 6.75% to repurchase 14.0 million shares at a price of $18.50 per share. How would such a buyback affect Blaine? Consider the impact on, among other things, BKI’s EPS, ROE, its interest coverage and debt ratios, the family’s ownership interest, and the company’s cost of capital. 4. As a member of the Blaine’s controlling family, would you be in favor of this proposal? Would you be in favor of it as a non-family shareholder?
Flash Memory, Inc. 1. Assuming the company does not invest in the new product line, prepare forecasted income statements and balance sheets at year-end 2010, 2011 and 2012. Based on these forecasts, estimate Flash’s required external
Ceres Gardening Company
Management related questions: 1. What have been the key factors in company’s growth? 2. How has the stock market responded to the company’s performance? Why? 3. What should Ceres’s strategic plan be, given the trends in the organic gardening market? 4. How would you evaluate Ceres’s marketing efforts? Should the GetCeres ™ program be expanded? Why or why not/ 5. What potential financial risks does Ceres face as it crafts its strategy for 2007? 6. If you were the CFO, how would you approach the issue of crafting a marketing plan for 2007?
Financial analysis 1. How has the company grown? What is its basic strategy and how has this evolved? 2. Is Ceres financially healthy? What parts of the financial statement might be a reason for confidence or cause of concern?
Blaine Kitchenware, Inc. 1. Do you believe Blaine’s current capital structure and payout policies are appropriate? Why or why not? 2. Should Dubinski recommend a large share repurchase to Blaine’s board? What are the primary advantages and disadvantages of such a move? 3. Consider the following share repurchase proposal: Blaine will use $209 million of cash from its balance sheet and $50 million in new debt-bearing interest at the rate of 6.75% to repurchase 14.0 million shares at a price of $18.50 per share. How would such a buyback affect Blaine? Consider the impact on, among other things, BKI’s EPS, ROE, its interest coverage and debt ratios, the family’s ownership interest, and the company’s cost of capital. 4. As a member of the Blaine’s controlling family, would you be in favor of this proposal? Would you be in favor of it as a non-family shareholder?
Flash Memory, Inc. 1. Assuming the company does not invest in the new product line, prepare forecasted income statements and balance sheets at year-end 2010, 2011 and 2012. Based on these forecasts, estimate Flash’s required external