Ford Motor Vep - 4377 Words

Corporate Finance Case Study 1 Butler Lumber Company 王金明 1101289036 æ Å"é› ªÃ¥ · 1101289033 æ Å"金é ¹  1101289039 å‘ ¨ æ  ¨ 1101289040 Abstract In this report, we study the case of Butler Lumber Company and analyze the financing problem it was confronted. In the first part, we give a brief description of the company, including the development process, equity structure, several important financial ratios which shows the basic conditions of the firm. Then we talk about the dilemma the company was facing and give some questions concerned that will be worked out in the later analysis. In the second part, all of the company’s financial ratios are taken into consideration in order to analyze the financial condition. At first we will discuss the company’s†¦show more content†¦1.3 A Glance at Significant Resumes amp; Facts Here we list several important facts found in the main body of the case for further use in the later analysis. 1) Despite the rapid growth in its business , positive expect in sales in the future and good profits, the company had experienced a shortage of cash to expand business. 2) The company’s current maximum loan was as much as $250,000 with SN Bank with the request of securing with its real property. 3) The NN bank might extend a line of credit to BLC up to amount of $465,000 at an interest rate of prime plus 2%. 4) BLC obtained rapid increase in sales during 1989 – 1991. 5) The six months of April to September accounted for 55% of annual sales. 6) No sales representatives were employed, and orders were taken by phone. 7) MB had not wasted his money in disproportionate plant investment. 8) MB gave attention to control his operating expenses, had personal control over every feature of his business and had little to offer in security for the loan. 9) The NN bank ga ve attention to the debt position and current ratio of business, and expected to reach sales of $3.6 million in 1991 10) The supplier provided for a discount of 2% for payments made within 10 days of the invoice date. 11) During the last 2 years MB had taken very few purchase discounts because of the shortage of funds. 12)Show MoreRelatedFord Motor Vep4363 Words   |  18 PagesCorporate Finance Case Study 1 Butler Lumber Company 王金明 1101289036 æ Å"é› ªÃ¥ · 1101289033 æ Å"金é ¹  1101289039 å‘ ¨ æ  ¨ 1101289040 Abstract In this report, we study the case of Butler Lumber Company and analyze the financing problem it was confronted. In the first part, we give a brief description of the company, including the development process, equity structure, several important financial ratios which shows the basic conditions of the firm. Then we talk about the dilemma the company was facing and give someRead MoreFord Company Analysis873 Words   |  4 PagesCase Study: Ford Motor Company’s VEP Question 1 Go ahead with the Value Enhancement Plan The feature of having both cash and new share options makes the VEP have its strengths and makes an excellence choice for Ford Motor Company. The cash option solves the problem of Ford having massive amounts of extra cash. Since Ford has no profitable activities for the extensive amounts of cash, returning the excess cash to shareholders allows them to make profitable investments. Different from aRead MoreEssay Ford Motor Company Memo2066 Words   |  9 PagesShareholder Value Enhancement Plan (VEP) Evaluation Ford Motor Company Ford Motor Company is an American automaker, it is the worlds fifth largest automaker based on worldwide vehicle sales. Its headquarters are based in Dearborn, Michigan, which is a suburb in Detroit. Henry Ford founded Ford Motor Company on June 16, 1903 and it became one of the largest and most profitable companies in the world, as well as being one of the few to survive the Great Depression. Ford Company is the largest family-controlledRead MoreEssay on Ford value enhacement plan2099 Words   |  9 Pages Ford Value Enhancement Plan (VEP) In April 2000, Ford Motor Co. announced a shareholder Value Enhancement Plan (VEP) to significantly recapitalize the firms ownership structure. Ford had accumulated $23 billion in cash reserves and under the VEP would return as much as $10 billion of this cash to shareholders. In exchange for each share currently held, the plan would give stockholders one new share plus the choice of receiving $20 in either cash or additional new Ford common shares. ShareholdersRead MoreFord Motor Company1787 Words   |  8 PagesFord Motor Company’s Value Enhancement 1. Does Ford have too much cash? The amount of cash that Ford is carrying on its balance sheet is too much considering that additional money not used for the advancement of the company belongs to the owners of the firm, the shareholders. Having too much cash on its balance sheet will be a disincentive to Ford’s employees who consequently will feel not feel an urgency to perform and add value to the company. Notwithstanding the fact that the companyRead MoreFord Motor Company Case1250 Words   |  5 Pagesï » ¿Ford Motor Company Case 1. Does Ford have too much cash? 2. How does VEP work? 3. What are the alternatives for distributing cash? 4. What problems is the VEP plan designed to solve? 5. As a shareholder, how would you approve the VEP? Would you elect cash or stock? Q.1) Does Ford have too much cash? Exhibit 6, 8, and 9 (figures in $ millions) provides selected balance sheet items for Ford, General Motors, and DaimlerChrylser. The given information indicates that Ford carries the highest amountRead MoreFord Motor And Value Enhancement Plan1132 Words   |  5 PagesFord Motor and Value Enhancement Plan Ford Motor announced its value enhancement plan (VEP) in 2000 to restructure its ownership. With the new VEP, Ford aimed to pay $10 billion cash back to its shareholders. Basically, the VEP provided all the existing shareholders, including the family and common shareholders, a proposal to exchange their shares one-for-one for new shares accompanying with an additional option of ei-ther achieving $20 per share or equivalent extra new shares based on the Ford’sRead MoreFord Motor Company964 Words   |  4 PagesCase 2: Ford Motor Company’s Value Enhancement Plan | 1. Does Ford have too much cash? For this question, we need some measurement of liquidity to compare the turnover rate and reservation of cash for Ford, GM, Chrysler and compare those measurements in different years to see if Ford have too much liquidity which means too much cash. Quick ratio is liquidity measurement which is a variant of the current ratio. It focuses on quick assets, which are those assets likely to be converted to cashRead MoreFord Motor1036 Words   |  5 PagesCase problem : Ford Motor Company’s Value Enhancement Plan Group 4 : Annie , Duong Boi Ngoc , Jussi , Michael Q1. Does Ford have too much cash? Why did Ford choose to accumulate so much cash? And why is Ford distributing a large amount of cash now? (1) To check whether Ford has too much cash, we have to calculate the cash ratio. But the data we have is not complete, we cannot find out that ratio. Instead, we calculate the cash turnover ratio to check whether Ford has excess cash. CashRead MoreFord Case4790 Words   |  20 PagesFinance Homework Whoever Pocketed Value From VEP? Teamï ¼Å¡ Dong Nan 1081209045 Gu Chengzong 1081209020 Li Hongke　 1081209050 Lu Linlin 1081209031 Lu Yao 1081209043 March 2009 Abstract Excessive cash and undervalued stock price forced Ford to conceive an unprecedented cash payout system - Value Enhancement Plan in 2000. For a dual-stock-structure company, this recapitalization did favor much Ford family which held the dominant voting power by giving