Hpl- Analysis

In: Business and Management

Submitted By carlofo
Words 597
Pages 3
As I mentioned during last session, there is an exam that goes along with this course and it is an investment decision. Please find enclosed the exam. The case includes a discussion about the discount rate that you are not supposed to cover, the discount rate is a given and in this particular case you should use a 9.4%.
Questions:
1. How would you describe HPL and its position within the private label personal care industry?
2. Using assumptions made by Executive VP or Manufacturing, Robert Gates, estimate the project free cash-flows. Are Gates projections realistic? If not what changes would you incorporate?
3. Estimate the project´s NPV, IRR and payback. Would you recommend that Tucker Hansson proceed with the investment?

Clearly state assumptions you make and provide enough information so that a reader can follow your analysis. I would expect the case write-up plus supporting tables.
If you include a print out of the spreadsheet, please make the tables easy to follow. For example, try to fit an entire table on one page.

About Hansson Private Label (HPL)
• Started in 1992 (Purchase of manufacturing assets from Simon Health and Beauty Products)
• Purchased by Hansson for $42 million ($25 million equity & $17 million debt) – Hansson’s largest single investment
• Hansson believed he was paying significantly less than replacement costs for the assets
• Hansson was confident private-label growth will continue
HPL’s development and success:
• Hansson’s focus on manufacturing efficiency, expense management and customer service turned HPL into a success
• Secured most major national and regional retailers as customers
• Conservative expansion of HPL – opening of any new facility only if (>60% capacity utilization)
• Currently, all operating at (>90%) capacity
HPL’s Business Operations & Performance:
• Manufacturer of personal care products…...

Similar Documents

Analysis

...Analysis & interpretation of financial statements – Ratio Analysis 1 Ratio Analysis Application • Ratio analysis is a means to an end. The end being to understand a company’s results for a year using its financial statements. • Ratio analysis may highlight unusual results or clarify trends, enabling various users of accounts to make informed decisions relating to the company. • For ratios to be useful, comparisons must be made - on a year to year basis, or between companies. On their own they are useless for any sensible decision making. 2 Ratio Analysis 1 Lecture example 1 How do the following users of financial statements benefit from ratio analysis? (a) Shareholders (b) Potential investors (c) Bank and other capital providers (d) Employees (e) Management (f) Suppliers (g) Government 3 Ratio Analysis Lecture example 1 (a & b) Shareholders and potential investors will use ratios to help them come to a decision on buying or selling the share of the company. (c) Banks and other providers of loan capital will assess whether further loans should be made to the company. (d) Management will use ratios to highlight weak performing areas in order to focus their attention on these areas. (e) Employees may use them as a basis for wage negotiation. (f) Suppliers may use ratios to assess creditworthiness. (g) Governments may use them for statistics or for assessing the worthiness of a government grant. 4 Ratio Analysis 2 Categories of......

Words: 1991 - Pages: 8

Analysis

...Forecasting and Valuation Analysis Our group is going to use Discounted Discount Method to calculate the value of per share about Medtronic, and we assume that the terminal year is the 6th year. Assumptions According to the 10-K, we can easily get the basic information (shown in the form below), and by using the function of equity value equal to dividend divide require cost of equity(r) minus growth rate and the assumption of the constant growth rate, we can calculate the growth rate to be 15.17%.And we also assume the number of shares outstanding to be constant in the next 6 years. | |2012 |2011 |2010 | |Number of shares outstanding |1053.9 |1077.4 |1106.3 | |Dividend to shareholders | $1,021.00 | $969.00 | $907.00 | |EPS | $3.43 | $2.87 | $2.80 | | ROE |21.14% |19.39% |21.18% | |DPS | $0.97 | $0.90 | $0.82 | |Net earing | $3,617.00 | $3,096.00 | $3,099.00 ...

Words: 419 - Pages: 2

Analysis

...Starbucks Strategy Analysis | Business Strategy | Assignement | 24/05/2010 | | | | “Making your organisation fit for purpose” Starbucks Coffe Company is the world leading brand in roasting and distributing coffee. The company owns now more than 15 000 coffee shops around the globe: it is settled in North America, Latin America, Europe, Middle-East and Asia. The diversity and depth of its offer (from smooth to extra roasted coffee, African, Arabian or Latin, and all the muffins, cookies and sandwiches) allow them to count on an international exposure that has last for many years. Still, their business tends to be flattening. And the number of competitors in their core-business market, even if the competition stays way back them, is growing constantly. Considering these facts, the objective of Starbucks is to strengthen its leadership on the market. We were then approached by Starbucks in this particular goal. In this folder, you will find an entire analysis of the external environment of Starbucks Coffee Company: the macro-environment, the competitors and market and the stakeholders’ expectations will lead to being aware of opportunities and threats. Then, we went on the study of the internal capabilities: the resources and competences, the sustained competitive advantage and the diagnosis of strategic capability that will permit us to define Starbucks’ strengths and weaknesses. [Thus, owing to the results obtained, we endeavour to recommend Starbucks......

Words: 285 - Pages: 2

Analysis

...strategy? * And consider the organisation's culture. * How has this influenced past strategies and is it likely to influence future strategy or constrain attempts to change strategy? * Beware of regarding different frameworks of analysis as distinct and separate; they relate to each other. For instance, the results of a value chain analysis could be put in the context of data from a PESTEL and 5-Forces analysis and are likely to provide more insight if they are. * Pull together your analyses and ask: 'What are the major issues that future strategy needs to address?'. * In all of this consider what information is there in all the tables, annexes and appendices? What are they and how do they relate to and inform the questions above? Step 3: Develop and Evaluate Strategic Options (Planning – Assignment B) * Use the results of these analyses as a starting point for developing strategic options. You will have begun to think of what the organisation might do during your analyses. Note these down. * But don't just rely on these. Generate more systematically other options by using some of the frameworks in part II, in particular Chapter 10, of Exploring Corporate Strategy – for example a TOWS matrix builds on a SWOT analysis that you have carried out; and Chapter 10 provides checklists of generic strategic options. * Evaluate the options by asking the following questions: * Which are most suitable in terms of the strategic position of the......

Words: 879 - Pages: 4

Hpl - Goliath Case Analysis

...reviewing the Goliath proposal and accompanying financial statements, it is our recommendation that HPL pursue the $170 million expansion of manufacturing capacity. Although the project involves some risks and opportunity costs, our analysis suggests that the project has a very high positive NPV that more than outweighs any such concerns. In addition to increasing market share and reducing costs, the Goliath project will have a positive effect on employee morale and productivity. The remainder of this memo will present the arguments for/against expansion, as well as the associated business risks. I. Arguments Supporting Expansion * Based on our assumptions in the financial model, the Goliath project has an NPV= $105,060,315 even with a conservative weighted average cost of capital of 10%. * The sensitivity analysis tables in the financial model clearly show that the project has a positive NPV even when the assumptions are modified. * The project increases HPL’s market share and profits. * Additional capacity will reduce costs. * HPL can capitalize on the first mover’s advantage, as private label growth is too modest to support multiple producers. * The growth will substantially boost employee morale and will foster a strong relationship with the largest customer. * Prospect of rapid growth and value creation since this expansion will allow HPL to accommodate and attract additional customers in the future. * More opportunities to expand......

Words: 599 - Pages: 3

Analysis

...and Quantas Airways ltd. Report Review analysis the Topic Frame is: Introduction The presented report is aimed to present understanding and interpretation of different financial ratios in the context of judging the financial performance of an organization. The financial ratio revealed on the basis of different financial records and figures for a particular organization, indicates the existing status of the company. In addition to this, there are a number of different types of financial ratios for a company which are aimed to show different aspects of financial performance of the organization namely profitability, Efficiency, and financial stability of the organization for a long term. From the perspective of an investor or a share holder, it is quite crucial to have proper information regarding existing financial ratio of the company before making worthy investment within an organization (Gitman, and McDaniel 2008). In context to this, the paper shade some intensive lights over thorough interpretation of different ratios of two prominent airlines companies namely Virgin Australia Holdings Ltd, QANTAS Airways Ltd. The primary objective of the paper is to reflect financial performance of both the organizations for last two financial years (i.e. 2010 and 2011) on the basis of the interpretation and review of financial ratio of both the organizations. Analysis of financial performance The analysis of financial performance of both the......

Words: 3139 - Pages: 13

Analysis

...Harley-Davidson Case Analysis Harley-Davidson Case Analysis Rayzhaun Jones Mississippi Valley State University Strategic Management Dr. Jimmie S. Warren Abstract With the growing global economy, companies are looking for ways to improve their market share. Many excellent firms have learned how to beat their competitors through the implementation of new management, marketing, and manufacturing techniques. Harley-Davidson is one of those excellent companies whom have challenged traditional ideas. We intend to show through this case study that any company can follow Harley-Davidson’s techniques and lead them to excellence. Mission Statement “We fulfill dreams through the experiences of motorcycling by providing to motorcyclists and too the general public an expanding line of motorcycles, branded products, and services in selected market segments.” Vision Statement “Harley-Davidson is an action-oriented, international company, a leader in its commitment to continuously improve its mutually beneficial relationships with stakeholders. Harley-Davidson believes the key to success is to balance stakeholders’ interests through the empowerment of all employees to focus on value-added activities. Company Profile and Case Analysis Harley-Davidson Inc. is an American motorcycle manufacturer. Harley-Davidson specializes in the sales of heavyweight motorcycles that are designed for cruising on highways. Harleys have a distinct design and exhaust sound that have......

Words: 1011 - Pages: 5

Hpl Case

...Label Questions: Group members: Ran An A20276158 & Guochen Ye A20273110 1) How would you describe HPL and its position within the private label personal care industry? HPL is a company manufactured personal care products that sold under the band label by other companies. The company has stable whole sales growth rate and become a successful by efficient manufacturing, good expense management and appropriate customer service. HPL is better off within the private label industry. Hansson had estimated that HPL had more than a 28% share of $2.4billion in wholesale sales from the manufacturers. That is HPL own a significant part of this market. 2) Using assumptions made by Executive VP of Manufacturing, Robert Gates, estimate the project’s FCF’s. Are Gates’ projections realistic? If not, what changes might you incorporate? Answer: see in table 1 the final answer FCF has been highlighted in red. It is not realistic. Because: 1. The contract HPL made with the customers is 3 years only, at the end of contract, the customer might not continue the contract. However, the financial estimation last for 10years. That is, the assumption of FCF is not realistic. 2. As the team acknowledged, after taking their project. HPL needs to tolerate much higher risk than it used to do. However, the estimation of the financial statement mostly based on the historical data of HPL which risk is stable in the lower lever. In other words, the estimated financial statement is not......

Words: 309 - Pages: 2

Analysis

...CHAPTER IX STRENGTHS, WEAKNESS, OPPORTUNITIES, AND THREATS ANALYSIS Strategic planning is a tool for organizing the present on the basis of the projections of the desired future. A strategic plan is a road map to lead an organization from where it is now to where it would like to be in five or ten years.It is necessary to have a strategic plan for your organization. In order to develop a comprehensive plan for your organization which would include both long- range and strategic elements.One of the most important parts of the strategic planning process is the examination of the internal and external environment of the business. The strengths or weaknesses of the business can be seen by considering its internal environment. On the other hand, the external environment factors of the business define the threats and opportunities it will face. Strengths, Weaknesses, Opportunities, and Threats analysis can be used for all sorts of decision making and proactive thinking rather than relying in habitual or instinctive reactions in the business. Specifically, SWOT analysis is basic straight-forward model that assesses what an organization can and cannot do as well as its potential opportunities and threats. SWOT analysis is essential in a business in accomplishing its objectives and what obstacles must be overcome or minimized to achieve the desired result. It is but inevitable for business enterprises to be faced with serious problems and be burdened with critical decision......

Words: 380 - Pages: 2

Analysis

...1. EXECUTIVE SUMMARY Financial analysis is the starting point for making plans, before using any sophisticated forecasting and planning procedures. Understanding the past is a prerequisite for anticipating the future. Financial analysis is the process of identifying the financial strength and weakness of the firm by properly establishing relationship between the items of the balance sheet and the profit and loss account. Financial analysis can be undertaken by management of the firm, or by parties outside the firm, viz. owners, creditors, investors and others. The nature of analysis will differ depending on the purpose of the analyst. 1. Investors: Who invested their money in the firm’s shares, are most concerned about the firm’s earnings. They more confidence in those firm’s that show steady growth in earnings. As such, they concentrate on the analysis of the firm’s present and future profitability. They are also interested in the firm’s financial structure to that extent influence the firm’s earning ability and risk. 2. Trade creditors and financial institution: they are interested in firm’s ability to meet their claims over a very short period of time. Their analysis will, therefore, confine to the evolution of the firms liquidity position. And the financial institutions are interested in the financial statements of the borrowing concern to ascertain its short- term as well as long-term solvency and also it profitability. 3. Suppliers: On the other hand, are......

Words: 2052 - Pages: 9

Hpl Case Study

...1) How would you describe HPL and its position within the private label personal care industry? HPL is a company manufactured personal care products that sold under the band label by other companies. The company has stable whole sales growth rate and become a successful by efficient manufacturing, good expense management and appropriate customer service. HPL is better off within the private label industry. Hansson had estimated that HPL had more than a 28% share of $2.4billion in wholesale sales from the manufacturers. That is HPL own a significant part of this market. 2) Using assumptions made by Executive VP of Manufacturing, Robert Gates, estimate the project’s FCF’s. Are Gates’ projections realistic? If not, what changes might you incorporate? Answer: see in table 1 the final answer FCF has been highlighted in red. It is not realistic. Because: 1. The contract HPL made with the customers is 3 years only, at the end of contract, the customer might not continue the contract. However, the financial estimation last for 10years. That is, the assumption of FCF is not realistic. 2. As the team acknowledged, after taking their project. HPL needs to tolerate much higher risk than it used to do. However, the estimation of the financial statement mostly based on the historical data of HPL which risk is stable in the lower lever. In other words, the estimated financial statement is not accurate. 3) Using CFO Sheila Dowling’s WACC......

Words: 341 - Pages: 2

Hansson Private Label, Inc Case Analysis

...Overview of the Industry As a manufacture of private label personal care products, Hansson Private Label, Inc. has a considerable amount (28%) of market share in its specific industry. However, private labels as a whole constitute less than 19% in the entire personal care industry. Therefore, growth of HPL depends on the growth of the industry and more importantly the growth of private label component within the industry. In terms of the personal care industry, market growth will not improve significantly in the future. As proven in the past four years, unit volumes in the industry increases less than 1% in each year and the dollar sales growth was only driven by modest price increases. Therefore, the opportunity for private labels will come in the form of obtaining a bigger slice of the pie. In other words, private labels will need to take market shares away from the brand names by penetrating deeper into a slowly expanding market. Brand name manufactures still control the majority of the personal care market. However, private labels have been gaining momentum in market shares as a result of greater consumer acceptance. The economic downturns have fostered a trend of thrifty spending among consumers. The private labels, with lower price and improving quality, offer an appealing alternative and substitute to the more costly brand names. Therefore, despite the whole personal care market size being quite fixed, the private labels have the prospect of growing within...

Words: 1536 - Pages: 7

Hpl Corporate Finance

...La empresa Hansson Private Label (HPL) se dedica a la manufacturación de distintos productos de cuidado personal como: jabones, shampoo, enjuague bucal, crema para afeitar, etc. La compañía es conocida por su crecimiento constante en ventas y debido a ello su cliente más grande le propuso incrementar su capacidad de manufactura con el fin de poder comprarle mayor cantidad de producto. HPL se propuso tomar la propuesta e incrementar su capacidad de producción con el fin de satisfacer un mayor rango de clientes sin que estos se compitan entre ellos por la disponibilidad del producto. Se busca generar un evaluar las fortalezas y debilidades de la empresa, así como evaluar si la empresa tomó o no una buena decisión al endeudarse para incrementar su producción, mediante el análisis de sus estados financieros en los últimos cinco años con el uso de distintas herramientas, así como otra información proporcionada por la empresa. Esto con el fin de buscar oportunidades de crecimiento y expansión para HLP y de ayudar a los inversionistas a tomar decisiones acertadas con el fin de maximizar su riqueza. Solvencia y liquidez de la empresa. La empresa siempre ha mantenido un nivel de liquidez estable durante los años, muestra de esto es se razón circulante en la que se puede analizar que el valor de sus activos circulantes se acerca a triplicar a aquel de sus pasivos a corto plazo. La empresa ha sido capaz de incrementar su producción e inventarios y aumentar la rapidez con la que......

Words: 1407 - Pages: 6

Hpl Framework

...In this paper we considered the concept of How People Learn HPL framework that was used by a National Academy of Science Committee to organize what is known about learning and teaching (National Research Council, 2000). The framework's includes four components where we to have "mini theories" about learning and teaching: * What should be taught, why it is important, and how this knowledge should be organized (knowledge-centeredness) * Who learns, how, and why (learner-centeredness) * What kinds of classroom, school, and school-community environments enhance learning (community-centeredness), and * What kinds of evidence for learning student ^, teachers, parents, and others can use to see if effective learning is really occurring (assessment-centeredness). Teachers must learn to balance and integrate all four components of the HPL framework if they are to teach effectively. Let us consider each component in detail. Picture 1 Interconnection components Picture 1 Interconnection components What, which, how Learning is highly social Constructive nature What, why, how What, which, how Learning is highly social Constructive nature What, why, how COMMUNITY Knowledge-Centeredness Learning involves knowledge, they answer the question what to teach in compliance with the educational goals and, therefore, the kinds of things that are worth knowing. Problem solving that people expertise in an area affects their ability to remember and solve problems. Experts notice......

Words: 1070 - Pages: 5

Analysis

...Topic Gateway Series Strategic Analysis Tools Strategic Analysis Tools Topic Gateway Series No. 34 Prepared by Jim Downey and Technical Information Service 1 October 2007 Topic Gateway Series Strategic Analysis Tools About Topic Gateways Topic Gateways are intended as a refresher or introduction to topics of interest to CIMA members. They include a basic definition, a brief overview and a fuller explanation of practical application. Finally they signpost some further resources for detailed understanding and research. Topic Gateways are available electronically to CIMA Members only in the CPD Centre on the CIMA website, along with a number of electronic resources. About the Technical Information Service CIMA supports its members and students with its Technical Information Service (TIS) for their work and CPD needs. Our information specialists and accounting specialists work closely together to identify or create authoritative resources to help members resolve their work related information needs. Additionally, our accounting specialists can help CIMA members and students with the interpretation of guidance on financial reporting, financial management and performance management, as defined in the CIMA Official Terminology 2005 edition. CIMA members and students should sign into My CIMA to access these services and resources. The Chartered Institute of Management Accountants 26 Chapter Street London SW1P 4NP United Kingdom T. +44 (0)20 7663 5441 F.......

Words: 3971 - Pages: 16