debt equity
The CEO of American Home Products, William Laporte, has run the company with a capital structure that consists mainly of cash and virtually no debt. He has been very successful with this capital structure providing stable, consistent growth and profitability. The growth rate has been in the range of 10% to 15% and return on equity has been about 30%. These are pretty impressive numbers. Mr. Laporte?s motto was to increase shareholder value, which is what he has done ever since he became CEO. One way to increase shareholder value was to change the capital structure by increasing debt and reducing equity. This change was not going to be easy because Mr. Laporte does not like incurring debt and also he ran the company successfully with virtually no debt so he does not see a reason to change.
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Some common words found in the essay are:
William Laporte, Home Products, capital structure, 30% debt, shareholder value, increase debt, american home products, American Home, earnings share, tax savings, american home, home products, 50% debt, pro forma results, increases shareholder value, capital structure change, increase shareholder, change capital structure,
Approximate Word count = 566
Approximate Pages = 2 (250 words per page double spaced)
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