Also, the company could establish new businesses or subsidiaries as part of market development to gain more revenues while reducing the effects of market risks. By increasing the AAA debt financing and lowering the investment into equity financing, the wealth of Deluxe will increase as a function of retained earnings and shareholder value thus rendering a positive future impact.
Singh do not decide on time about the capital structure, then it is going to be even more challenging as there is a chance the cost of capital will rise.
We recommend that Deluxe prevent its debt from losing its current credit rating and therefore paying a higher rate of interest on its outstanding debt. However, this advantage was not managed properly as too much equity financing was used which increased the shares outstanding and free float and lowered the stock price.
The proposed project is to be evaluated over a three-year time horizon. The following information is also relevant: To accomplish this task, Deluxe must optimize its equity trading price, preserve its debt capacity ability to issue more debt and keep its AAA debt ratingand optimize the cost of capital while preserving a good debt rating by meeting debt payments via the cost of capital.
The operations of the business much reflect the financial strategy of Deluxe. Acquire more debt to attain a lower cost of capital. By selling iDLX, Deluxe lost a chance to enter a new business than the payment business they were in for years. The financial return will be such that a higher EPS and market share for Deluxe will be the outcome.
In other words he abandoned company plans to position itself in the promising adjacent electronic payment business. One of the first and the foremost risk is the Business Risk. Making SWOT analysis work. At the same time diversify its current business to maintain its market share and secure future cash flow.
Finally, Deluxe must strategize and make all operating decisions based on the financing strategy. The following are the main threats against Burger King: However the check printing portion of the payments industry is mature.
With a relative market share of almost 2, Deluxe is dominating the scene!
The value of net current assets at the end of the evaluation period can be assumed to be the same as at the start of the period. In Deluxe announced a major strategic shift with the spin-off of its technology-related subsidiaries.
Strong brand image High market penetration Moderate differentiation of products Burger King has one of the strongest brands in the industry. Recommended strategy for this comapny Deluxe Corporation is a large chain of retail stores operating in the USA.
This being said the recent drop in check demand as well as the current repositioning of the company on its core business have highlighted some possible issues in current financial structure: The chosen strategy to reposition "the company as a pure -play-check printing company" is debatable but risky.
Strengths, weaknesses, opportunities and threats SWOT analysis. Another inherent risk of this single focused strategy is the loss of business diversification options.
Higher market penetration is a strength based on the large number of Burger King restaurants across the globe.
The cash on hand that Deluxe does generate will have to go to maintaining the operating capital to finance daily operations.
Deluxe Corporation is a leader in the check printing industry. They did this by closing around 50 plants, reducing its labor force by half and divesting 20 non-core businesses.
The other risk is the volatility of the capital market. Additionally, what financing requirements do you foresee for the firm in the coming years? This will provide better and more integrated service to the current clientele and enable more sales by facilitating new clients whom wish to have such a level of service.
In short the forecast would need to be revised by the recommended changes Singh would apply to the new financial policy. The main objectives of Rajat Singh new financial policy should address the following points:Excerpt from Essay: Deluxe Corporation is a leader in the check printing industry.
However, recent times have struck Deluxe with financial structure problems associated with obtaining the most optimal capital mi-centre.comore, the objective of this summary is to assess the recommended capital structure alternative and its impact on the.
This gives Deluxe the flexibility, in unfavorable conditions, to fluctuate between two bond ratings without major increases in the cost of capital. Moving up in rating will benefit Deluxe in other ways as well.
A jump to the AA bond. In Julyan investment banker advising Deluxe Corporation must prepare recommendations to the company's board of directors regarding the firm's financial policy. Special considerations are the mix of debt and equity, and the maintenance of financial flexibility.
DLX: Deluxe Corporation broker recommendations. Get the latest broker recommendations from Zacks Investment Research. I ordered my logo through deluxe and. I ordered my logo through deluxe and was more than pleased!
I wanted to make some company shirts, so I figured I would use the link on deluxe. Deluxe Corporation, a leader in providing small businesses and financial institutions with products and services to drive customer revenue.Download