author thanks National Science Council for financial support in this project‚ NSC96-2416-H-005-026. The Impact of two agency problems on the cost of capital Abstract We test the relation between the cost of capital and two agency problems‚ free cash flows and overinvestment in this paper. The empirical results show that both agency problems have significantly positive impact on the cost of capital. In addition‚ the incentives from stock-based compensation also have significant positive influence
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significantly larger market share than those same adversaries. But with the new increase in demand‚ a lack of borrowing power‚ a very “loose” accounts payable collection system and a growing inventory pool‚ Cape Chemical ran into cash flow issues. Since they are running into cash flow issues now‚ even with double-digit growth rates year over year‚ we can only assume that the company will have a even larger financial burden when those same normal‚ growth rates slow. I have outlined three scenarios‚ all of which
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Overview The footwear industry is a mature‚ very competitive with low growth and stable profit margins. Active Gear‚ Inc. is a privately held footwear company which is a profitable firm in the industry with $470.3 million revenue in 2006. West Coast Fashions‚ Inc is a large business of men’s and women’s apparel decided to dispose of one of their divisions: Mercury Athletic with $431.1 million revenue in 2006. AGI is very profitable but it is smaller than other competitors‚ which is becoming a competitive
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Starbucks Corporation My Case 7 Spring 2007 Discount Rates in Valuation Discount rates play a key role in the valuation of discounted cash flows. Three rates are generally used to calculate the present value of future cash flows: the cost of equity (Ke)‚ the weighted-average cost of capital (WACC)‚ and the unlevered cost of capital (Ku). The Cost of Common Equity The cost of common equity is the building block for all of the other discount rates. The cost of common equity is based on
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Earnings per share 2.1.8 Return on investment 2.2 Balance Sheet 2.2.1 Current/ quick ratio 2.2.2 Working capital cycle 2.2.3 Gearing 2.2.4 Asset turnover 2.3 Statement of Changes in Equity 2.4 Cash flow Statement 2.4.1 Operating cash flow/Revenue 2.4.2 Free cash flow 2.4.3 Cash in hand 3.0 Review of Qualitative Information 3.1 Dialog Mobile 3.2 Dialog Television 3.3 Dialog Broadband Networks 4.0 Information Systems 4.1 Introduction to information systems 4.2 Role of Information
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1. Do you think Mercury is an appropriate target for AGI? Why or why not? Mercury is an appropriate target for AGI. AGI is looking to increase its revenue and profit by utilizing synergies. The initial aim of AGI for acquiring Mercury Athletics is to increase leverage with contract manufacturers and to boost the cooperation with the retailers and distributors. AGI was one of the most profitable and successful companies in the market segment‚ but the firm’s size remained rather small in comparison
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Group-based case report Torstar Corporation BUSN81 Theory of Corporate Finance 2011 Autumn 1. Introduction The case of Torstar Corporation suggests the plan and result of repurchasing its Class B shares in December of 1997. Besides this‚ the situation of its business structure‚ capital structure and expenditures‚ future plan are also described in the case. Therefore‚ the purpose of our case study is to state‚ analyze and drew to some important conclusions about Torstar Corporation
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Mercury Athletic Footwear Case Assignment Questions: 1. Is Mercury a good target for AGI? Discuss strategic fit of brands‚ products‚ customers‚ and distribution. Identify specific sources of value. Discuss AGI’s strengths/weaknesses compared with other bidders. I think Mercury is a good target for AGI: The brands--the AGI brands and logos are associated with a lifestyle that was prosperous‚ active and fashion-conscious. The Mercury brands are athletic and casual footwear. The products--AGI focused
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company plans to sell its properties‚ which should reduce asset size by INR 960mn and recover advances worth INR 1.1bn from trusts. This would lower the asset base by about 50%. Further‚ 1.5x property value of book assets would raise incremental cash flow of INR 1.45bn‚ reducing overall K-12 book value to just INR 300mn‚ which will be amortized over
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West Fourth Street New York‚ NY 10012 adamodar@stern.nyu.edu Abstract Most firm valuation models start with the after-tax operating income as a measure of the operating income on a firm and reduce it by the reinvestment rate to arrive at the free cash flow to the firm. Implicitly‚ we assume that the operating expenses do not include any financing expenses (such as interest expense on debt). While this assumption‚ for the most part‚ is true‚ there is a significant exception. When a firm leases an
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