Modigliani and Miller (1958) theorem has been widely touted as the basis for capital structure theory (M&M Propositions). While previously rationalizing that a firm should be indifferent between various levels of financial leveraging – a further study ‘optimal’ level of capital structure which enhances the use of a tax shield to best offset the cost of debt. It is important to note however‚ that there are several implicit considerations & limitations that are imposed with the increase of leverage
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Aurora Borealis hedge fund‚ considers the possible gains from increasing the debt capitalization of The Wm. Wrigley Jr. Company. Blanka suggests Wrigley raise the amount of $3 billion in debt of the capitalization while Wrigley has been conservatively financed and remained no debt at the end of 2001. This report is aiming to analyze whether Wrigley should use $3 billion debt recapitalization to either pay dividends or to repurchase shares. 2.0 Current Capital Structure Generally‚ firms can choose
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The Wm. Wrigley Jr. Company: capital structure‚ VALUATION and cost of capital Introduction: Blanka Doborynin a managing partner of AURORA BOREALIS LLC tries to initiate a research for a potential investment in Wrigleys. They are trying to recapitalize the firm. Wrigley’s which is 100% equity financed has a market value of $13‚103‚000‚000 the question begins if it is totally equity financed is it running at its efficient level? Or Is it better to recapitalize the structure and thereby bring
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S & S Air: Case Study: S & S Air’s Mortgage 3001-3 FNCE Financial Management Week 4 William Jones October 9th‚ 2012 Case Study: S & S Air’s Mortgage Background: S&S Air manufactures light aircraft. The owners of S & S Air‚ Mark Sexton and Todd Story‚ were impressed by the work Chris had done on financial planning. By using Chris’s analysis and looking at the demand for light aircraft‚ they decided that their existing fabrication equipment was sufficient‚ but that it was
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Both Louise Tilley (Tilly‚ et al.‚ 1992) and Wrigley (Wrigley‚ 1978) argued that this effect of mass child foundling and abandonment was a form of “social distribution of children in Medieval Europe” where houses with extra children distributed them to those with deficiency in an effort to balance the economics of the time ‚ this is however from an economical modelling and has nothing to do with family decision making. Boswell (Boswell‚ 1988) also asserts that children were redistributed in the
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From Wrigley Field to Yankee Stadium A mighty and triumphant roar radiates from the throats of the thousands upon thousands of people packed into the stands like sardines. Tears of joy stream down the faces of grown men as the team they have loved since they could first walk has just won the World Series. The sport of baseball has grown to become the national pastime of the United States since Abner Doubleday first invented it in 1839. From 1839 to the present‚ many things have changed about the
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S&S Air‚ Inc. 2009 Income Statement Sales COGS Other Expenses Depreciation EBIT Interest Taxable Income Taxes (40%) Net Income $20‚077‚000 $14‚985‚000.00 $2‚399‚000.00 $655‚000.00 $2‚038‚000.00 $362‚000.00 $1‚676‚000.00 $670‚400.00 $1‚005‚600.00 Dividends Add. To RE $205‚000.00 $800‚600.00 2009 Balance Sheet Current Assets Cash AR Inventory Total CA Fixed Assets Net P&E Total Assets 1. Ratios Current Ratio Quick Ratio Current Liabilities $365‚040 $1‚534‚680 $1‚238‚500 $3‚138‚220 AP Notes Payable
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Law 494 Part 1 Shlensky v. Wrigley Facts: William Shlensky (plaintiff/appellant)‚ minority stock holder for the Chicago Cubs baseball team sued the team directors who deferred the case to Phillip Wrigley (defendant/appellee) stating mismanagement and negligence because of the refusal of the directors in installing lights at Wrigley Field‚ home field for the Chicago Cubs. Procedural History: Plaintiff original case was lost at trial and plaintiff appealed. Issue: The issue
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Shlensky vs. Wrigley The case is about a stockholder named Shlensky who is suing the board of directors of Wrigley Field on the grounds of failure to install lights at the stadium. This is a claim of mismanagement and negligence by the directors. At the time of the case‚ The Chicago Cubs were the only major league team without lights on their stadium. Mr. Wrigley‚ the principal owner of the team‚ refused to add lights onto the stadium because he felt that‚ "baseball is a daytime sport and it would
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Case Study: S&S Air Inc. Founders of S&S Air‚ Inc. Mark Sexton and Todd Story recently hired Chris Guthrie to come on board as their financial planner. His job entailed gaining valuable information as to compare how their company was fairing with competing companies in the aircraft manufacturing industry. Through his research‚ Guthrie calculated many ratios through the careful examination of S&S Air’s balance sheet and income statement
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