Day 87 in MIT Sloan Fellows Class 2023, Financial Management 7, Summary of business cases and financial theories - 2
- Mariott
- Concepts
- How to make fast growth companies possible
- consistency between financial policy and product market strategy
- Excess debt capacity
- Financial policies about debt
- Short or long-term debt?
- Secured or unsecured debt?
- Fixed or variable rate?
- Straight or convertibles?
- Issued preferred shares?
- Pay dividends?
- Optimal debt and equity balance
- financial distress
- tax shield
- WACC
- Key findings
- What to do with extra money?
- Accelerate growth of existing business
- Diversify
- Increase dividends
- Repurchase shares( Cheap way to pay dividends)
- Pay Down Debt
- Financing decision and investment decision are different
- Change in capital structure: Use debt to buy equity
- Investment: Repurchase shares at $23.5 with large premium
- Repurchase shares tend to increase EPS and decrease P/E
- tender or not tender? When you repurchase shares, you need to announce at least either quantity of buying or price of repurchasing.
- What to do with extra money?
- Concepts
- AT&T
- Concepts
- Debt ratings
- BBR(Basic Business Risk)
- Impact of dividends payment
- Diverstiture
- Monopoly
- Key findings
- Signaling
- new equity issue is not good sign for investors.
- Tender offer to repurchase would increase stock price
- Dividends increase would increase stock price
- Dividends decrease would decrease stock price
- Basic strategy
- Invest in all NPV positive projects
- Have an optimal debt/equity balance - must issue either equity or debt
- Do not cut dividends
- Do not issue equity
- Signaling
- Concepts
