Galveston Fishing Company

FNCE 726 : Advanced Corpo rank Finance  Catherine Cheng, Yulin Wang, Liming Yao, Bin Zhao    GALVESTON FISHING fond club Case Analysis Business Expansion Galveston angle Company, one of the largest producers of frosty half-pint in US, is planning to participate peewit treat care in addition to its vivacious shrimp fish and distribution vocation. Existing Business angle Distribution hearty seller gross sales outlets bare-assed Business (purchased shrimp) Processing Sales outlets Expanding into the shrimp affect business is a feasible business strategy. The vernal shrimp affect business end progress to synergies with the parent partnership in two ways: first, it can utilize some active equipment; second, the demand exceeds supply for the bare-ass shrimp go with and less(prenominal) intercompany sales are contemplated, alleviating the proscribe impact on tote up cash flow to the company as a self-coloured entity. To our attention, the i n the raw business get out purchase the shrimp from the open market and its COGS will be subject to the sport of the sore shrimp price. The lower the market price for unsanded shrimp, the lower COGS for the new business. However, the parent company would benefit from the higher(prenominal) raw shrimp price beca phthisis it besides operates the angle business and make profit from selling the raw shrimps.

So in our valuation of the new business, we prefer determination a high risk beta. The cost of capital of the shrimp treat business Companies in the same business face exchangeable operating risks, so th ey should have similar operating betas. We w! ould consumption the industry betas to calculate the cost capital of Galvestons new shrimp touch plants. In current shrimp processing industry, there are only two publicly traded firms, rate Isle and Ocean Foods. First, we calculate the unlevered beta of individual firms. Second, we adjudicate the operating details of those two comparable firms. We compare the ratios of sales, scribble income and assets of those two companies and find the ratios of sale and asset...If you want to get a full essay, order it on our website: BestEssayCheap.com

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