The Euroland Foods case study gives an outline of the company as of 2001. This company had been facing some difficult times due to the lack of research and development projects. Finally, the company decided to consider different projects to gain market share and increase the total value of the firm. Unfortunately, Euroland’s overleverage, debt-to-equity ratio is 125%, this is a concern among the company’s bankers. They dictate that the financing must be modest and that the company avoids to increase it’s debt. In an attempt to decrease the debt-to-equity ratio the company established a fixed capital budget, which was set below the total cost of the projects that they were considering.
Theo Verdin founded Euroland Foods in 1924 with the attempt of being a branch of his dairy business. Euroland Foods became a multinational producer of high-quality ice cream, yogurt, juice and bottled water. Theo Verdin accomplished this success by relying on his capabilities to develop new products and by imposing an aggressive marketing campaign. By 1979, Euroland had become large enough to go public. Its stock was traded in Brussels, London and the Frankfurt stock markets. In 2000, Euroland Foods had sales of almost EUR 1.6 billion
Euroland headquarters are located in Belgium. They offer products in other European countries. Including, the Netherland, Western Germany, Luxemburg, Northern France and Britain. The company’s main product is ice cream accounting for 60% of total sales. Ice cream seems to be their main product because it’s loyal customers, high content of butterfat and a wide range of original flavors. Yogurt sales account for 20% of total revenue, and the remaining 20% is divided between bottled water and fruit juice at 10% each.
The company’s revenues had been at the same level since 1998, the company credited this to the low population growth in northern Europe and the competition created by new companies gaining market share in... [continues]
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