Grand Metropolitan

1. What do you think about the capital structure policies Diageo has pursued in the past. Do they make sense? How does it compare to Diageo’s competitors’ policies? Which competitors would make for the best comparison? (40%) Diageo was formed from the merger of Grand Metropolitan plc and Guinness plc. Before the merge, both companies used little debt (based on the book D/E ratio and net debt to total capital in the table below) to finance themselves which helped them gain and maintain high credit rating (A and AA respectively). After the merge, Diageo wanted to take the same path by maintaining the interest coverage between 5 and 8 (through actions such as new debt issuance, share repurchase programs shown in figure 1) and having EBITDA/Total Debt between 30 and 35 % to avoid potential downgrade. Its market gearing is 25%. Furthermore, its debt's pay-back period (Debt/EBITDA) shows its ability to pay off its incurred debt in a relatively short period of time. Coupled with the high multiple of cash available for interest payments over the years (EBITDA/Interest expense), the probability of a financial distress is low. We know market gearing is equal to debt over enterprise value. Using data from exhibit 4, we find debt level equal to $6.7 billion. Diageo can take on more debt if needed and benefit from the advantages of a high credit rating. This conservative financial policy allows Diageo to get a rating of A+ with the possibility to raise debt readily with lower promise…

Amarna is a city that is separated. The separation occurs within the title of nobility or one of a commoner. This was the urban plan, or the central idea of the design of the city. Since this was a capital city in the Egyptian empire, the nobles cannot be living at the same level or area as the people they rule over. That would be a disgrace! The city designers too this ideal and made all their designs for the city around that image. When any large metropolitan area is created, the organization…

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The industrial age has change how the world is being structured. During the agricultural age, the land was mainly used to produce food for sustaining both human and animals. As we moved into the industrial, factories and city centers began being built. There arose a need for adequate living arrangements for the people that worked in the factories and city centers. Urban areas designed to accommodate large numbers of families began to spring up around these factories and city centers. Fast…

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started out as Ryan Homes in 1948 in Pittsburg and became NVHomes, Inc. in 1980. The company currently operates in fourteen states and Washington D.C., and under four trade names: Ryan Homes, NVHomes, Fox Ridge Homes, and Heartland Homes. Ryan Homes and Fox Ridge Homes’ primary market are first time and move-up buyers. Ryan Homes operates in 27 metropolitan areas located in Maryland, Virginia, Washington D.C., West Virginia, Pennsylvania, New York, North and South Carolina, Florida, Ohio, New…

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