Gainesboro Machine Tools Corporation Executive Summary Company: Gainesboro Corporation is a company that began in 1923 as a manufacturer of metal machinery parts which was in high demand during the Second World War. Since then‚ Gainesboro has changed with the times‚ entering into the machine tool industry in 1975 and most recently has transitioned into computer-aided design and computer-aided manufacturing (CAD/CAM) equipment manufacturer. Recently‚ two events have events have taken place
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INDIAN INSTITUTE OF MANAGEMENT‚ INDORE Finance 2 Case Analysis Gainesboro Machine Tool Corporation Course Instructor: Prof A Kanagraj Submitted By: Amol Vyawahare Roll Number: 2008PGP021B Gainesboro Machine Tool Corporation Background Reading: Once a company makes a profit‚ they must decide on what to do with those profits. They could continue to retain the profits within the company‚ or they could pay out the profits to the owners of the firm in the form of dividends. Once the
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Executive Summary Gainesboro Corporation was a company who designed and manufactured a number of machinery parts‚ including metal presses‚ dies‚ and molds. The company was found in 1923 in Concord‚ New Hampshire‚ by two mechanical engineers‚ James Gaines and David Scarboro. The two men had gone to school together and were disenchanted with their prospects as mechanics at a farm equipment manufacturer. In the 1940’s Gainesboro produced armored-vehicle and tank parts and miscellaneous equipment
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Gainesboro Machine Tools Corporation Teaching Note Synopsis and Objectives In mid September 2005‚ Ashley Swenson‚ the chief financial officer (CFO) of a large computer-aided design and computer-aided manufacturing (CAD/CAM) equipment manufacturer needed to decide whether to pay out dividends to the firm’s shareholders‚ or to repurchase stock. If Swenson chose to pay out dividends‚ she would have to also decide upon the magnitude of the payout. A subsidiary question is whether the firm should
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Summary of Facts September of 2005 Ashley Swenson is faced with preparing a recommendation on the restructuring of the dividend payout policy for Gainesboro Machine Tools Corporation. In the past few years the company has experienced a decrease in sales due to increased competition. With the recent development of the Artificial Workforce‚ the company is looking at making a positive turnaround. With the soon to come global expansion and the forecasted growth in sales brought by new innovations of
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GAINESBORO MACHINE TOOLS CORPORATION Overview In mid September 2005‚ Ashley Swenson‚ the chief financial officer of this large CAD/CAM equipment manufacturer must decide whether to pay out dividends to the firm¡¦s shareholders or repurchase stock. If Swenson chooses to pay out dividends‚ she must also decide on the magnitude of the payout. A subsidiary question is whether the firm should embark on a campaign of corporate-image advertising and change its corporate name to reflect its new outlook
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pros and cons Conclusion Founded in 1923 In early days‚ it has designed and manufactured a number of machinery parts‚ including metal presses‚ dies and molds. By 1975‚ it has evolved as innovative producer of industrial machinery and machine tools. In 1980‚ entered in CAD/CAM and established itself as industry leader Aggressive entry of large foreign firms damped sales The recent restructuring has improved efficiency and development of Artificial Workforce. System. The
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effective. Disadvantage : * 40% payout ratio will increase the cost of debt and put at risk it s investment opportunities * According to Asquith and Mullins (1986‚36) dividend signalling is more effective for lower risk firms‚ which Gainesboro is not. * Raise the capital to pay dividend by borrowing more will lead to an increase of debt to equity ratio and consequently financial risk. Reaction of various providers of capital : * Gainesboro’s shareholding is constituted at 26%
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How might various providers of capital (shareholders and creditors) react if Gainesboro repurchased its shares? Should Gainesboro do so? Repurchasing shares or share buyback: – Open market repurchases (buy over time as other investors) – Tender offer (buy shares at a precise date) – Targeted repurchase (buy from major shareholder There are ways for shareholders to receive cash without being paid dividends. A firm can buy back some of its shares with the advantage being that most investors
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David F. Swenson and Philip L. Quinn are two brilliant authors that share some of the same views on the meaning of life as one another. They both believe religion is the way for one to best live a moral life. Even though the share the same main ideas‚ they little differences that make them stand out. Swenson makes statement that man typically lives on ward but tends to reminisce back in time. By this he means that if there was no past‚ there could be a future looking at it through retrospect. As
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