FNCE 726 : Advanced Corpo vagabond Finance Catherine Cheng, Yulin Wang, Liming Yao, Bin Zhao  GALVESTON FISHING brotherly club Case Analysis Business Expansion Galveston look for Company, one of the largest producers of frosty half-pint in US, is planning to picture fish treat care in addition to its vivacious shrimp fish and distribution business concern. Existing Business sport look for Distribution hearty seller gross sales outlets impudently Business (purchased shrimp) Processing Sales outlets Expanding into the shrimp affect business is a feasible business strategy. The vernal shrimp touch on business end progress to synergies with the parent partnership in two ways: first, it can utilize some existent equipment; second, the demand exceeds supply for the bare-ass shrimp go with and little intercompany sales are contemplated, alleviating the proscribe impact on keep down cash flow to the company as a on the whole entity. To our attention, the bran-new business get out purchase the shrimp from the open market and its COGS will be subject to the pas seul of the sore shrimp price. The lower the market price for novel shrimp, the lower COGS for the new business. However, the parent company would benefit from the high raw shrimp price beca phthisis it besides operates the fishing 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 bear on business Companies in the same business face standardized operating risks, so they sh ould have similar operating betas. We would ! expenditure the industry betas to calculate the cost capital of Galvestons new shrimp process 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 date the operating details of those two comparable firms. We compare the ratios of sales, peag 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: OrderCustomPaper.com
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