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The management team must look at all the capital budgeting
CUSTOM SNOWBOARDS 29 techniques to understand the total viability of the project. The decision will not be an easy one, but will require careful review of the entire financial picture.
B5. Summary
Custom Snowboards has demonstrated that European expansion is an idea that is viable for the company. The company must now decide if they wish to build, merge, or acquire within the European market. This will not be an easy decision, but meticulously made after analyzing the capital structure and corporate strategies.
Custom Snowboards has the option to build a new plant within the European market. They would need to determine where the plant would be located and acquiring the necessary land and permits. The company would be required to start from scratch to get started. The plant would be built to the company’s specifications and could be economical, but would require a large amount of money for start-up initially.
Buying a building is another option available to Custom Snowboards, but ties the company to the area. This would be the smartest move based on the financial …show more content…
The costs to start a new company would be limited and there would be a readily accessible building, contacts, product knowledge, market knowledge, and increased earnings per share. Not all employees will be able to retain their job, however the employees that remain will be the most knowledgeable regarding the product to boost sales and revenue. This will help the company attain the success it hopes to achieve.
CUSTOM SNOWBOARDS 32
B6. Presentation
The recommendation was made to initiate a merger between Custom Snowboards and SnowFun, Inc. The financial information reviewed shows the companies will produce an increase in capital from net sales and reduce production costs. This will provide the stockholders with a higher return on investment due to growth after the merger has taken place.
Merging will not require Custom Snowboards to acquire a large amount of funding or long-term debt since a stock exchange will take place. The earnings per share for Custom Snowboards will increase $0.92 and SnowFun $0.20. A total of 500,000 shares will be available after the merger. SnowFun will receive 3 shares to every 1
CUSTOM SNOWBOARDS 29 techniques to understand the total viability of the project. The decision will not be an easy one, but will require careful review of the entire financial picture.
B5. Summary
Custom Snowboards has demonstrated that European expansion is an idea that is viable for the company. The company must now decide if they wish to build, merge, or acquire within the European market. This will not be an easy decision, but meticulously made after analyzing the capital structure and corporate strategies.
Custom Snowboards has the option to build a new plant within the European market. They would need to determine where the plant would be located and acquiring the necessary land and permits. The company would be required to start from scratch to get started. The plant would be built to the company’s specifications and could be economical, but would require a large amount of money for start-up initially.
Buying a building is another option available to Custom Snowboards, but ties the company to the area. This would be the smartest move based on the financial …show more content…
The costs to start a new company would be limited and there would be a readily accessible building, contacts, product knowledge, market knowledge, and increased earnings per share. Not all employees will be able to retain their job, however the employees that remain will be the most knowledgeable regarding the product to boost sales and revenue. This will help the company attain the success it hopes to achieve.
CUSTOM SNOWBOARDS 32
B6. Presentation
The recommendation was made to initiate a merger between Custom Snowboards and SnowFun, Inc. The financial information reviewed shows the companies will produce an increase in capital from net sales and reduce production costs. This will provide the stockholders with a higher return on investment due to growth after the merger has taken place.
Merging will not require Custom Snowboards to acquire a large amount of funding or long-term debt since a stock exchange will take place. The earnings per share for Custom Snowboards will increase $0.92 and SnowFun $0.20. A total of 500,000 shares will be available after the merger. SnowFun will receive 3 shares to every 1