Case # 3 Sears

1. Evaluate the capital structure of Sears.

2. What changes in the capital structure would you recommend for Sears?
3. Trace some of the attempts by Sears to “remake” itself. Evaluate the effectiveness of those
efforts.
4. What opportunities/ risk do you see for Sears?
5. Can sears prosper in the current market segment? Where should Sears be?

1. Evaluate the capital structure of Sears.

From Oct 11 the Debt of Sears was continued to increased t 97.6% or amounting to Php 4.9 billion
And the equity decreased down to 2.4& or amounting to 120 M from 512 M.
The liability
was greater than the Equity. This indicate that Sear holding Inc., doesn’t meet to pay its obligation
and at high risk for bankruptcy. Sears is a company with an ever increasing amount of debt and an
ever decreasing amount of equity or Revenue. It had disaster financial statement.

6. 2.) What changes in the capital structure would you recommend for Sears?
 bankruptcy, also called reorganization or rehabilitation bankruptcy, allows a firm the opportunity
to reorganize its debt and to try to re-emerge as a healthy organization. It is strategically, a
company’s way of retaining control of their bankruptcy

bankruptcy, also called reorganization or rehabilitation bankruptcy, allows a firm the opportunity
to reorganize its debt and to try to re-emerge as a healthy organization. It is strategically, a
company’s way of retaining control of their bankruptcy

It also permits the creditors to take a more active role in fashioning the liquidation of the assets
and the distribution of the proceeds than Bankruptcy

Since the Sears had more debt than income Bankruptcy strategy is the best alternative strategy .

3.)Trace some of the attempts by Sears to “remake” itself. Evaluate the effectiveness of those
efforts.
The Sears attempted to remake itself by closing some stores or 300 stores as part of a larger
strategic refurbishment in order to free up more capital and reduce risk. And selling the portion of
its Assets to lessen its debts.

4.) What opportunities/ risk do you see for Sears?

The opportunities that they can be plan for restructuring for their existing debt at a proportion where
in they can increase the financial performance of the company to avoid the high potential or exposure
to bankruptcy. If Not, the risk is no other way but to declare bankrupty.
5.) Can sears prosper in the current market segment? Where should Sears be?
No , Sears is proven needs to file bankruptcy based on financial indicators. And if anyone already saw
opportunity in Sears before, they would not file bankruptcy instead because they would be subject for
creating new joint venture and asked investors to invest.

Case # 4 General Motors

1.) Evaluate the capital structure of GM
The General Motors’ capital composed of Large debt both short term and long term as compared to
capital both common and preferred stock.

2.) Does GM have a capital structure to be able to contribute to compete in the world market?
Yes, they can still be able to compete in the market as long as they can still finance their debit
properly to generate more income to Increase Stockholders Equity. And making a strategy plan
will do such as investing in creating new and improved vehicles, investing in new technology and
creating joint venture.

3.) Discuss GM’s dividend policy

4.) During the past 3 years, the average dividends per share
growth rate of GM stock was 3.30% per year.
5.) During the past 11 years, the highest dividend yield of GM
stock was 5.22%. The lowest was 0.80% and the median
was 4.02%.
6.) GM’s dividend remained stable in 2018
Case 9# pepsi

1.) Discuss the recent strategy on the part of Pepsi to

compete more effectively.

The Pepsi is one of the two leading soda beverages brands in

the industry. It was formed after the merger of Pepsi and Frito
lay in 1965 the recent strategy they did to compete more is
 marketing strategy Before moving on to the details of Pepsico’s
marketing strategy, take a look upon how it has positioned its
brand and products in the market. It has positioned itself as a
snacks and beverages brand that include nutritious and low
calorie choices apart from normal soda products. They invested
a lot in Marketing. Pepsi has continued to invest in product
quality and packaging to stay the customers’ first choice or this
is the Product and Packaging Innovation. Aside from that they
also invested in digital marketing campaigns and sports and
sponshorship marketing. Even the social media they used also
for their marketing.

2.) Does the capital strsucture allow pepsi compete effectively.

As of calendar 2018, the total liabilities of pepsi amounting to

63, 046. While the total shareholder’s equity amounting to
14518 in USD $ in Mliliions. Using debt to equity ratio, it has
4.34. . Yes, because PepsiCo Inc.’s net income attributable to
PepsiCo declined from 2016 to 2017 but then increased from
2017 to 2018 exceeding 2016 level. It means the strategy that
pepsi made can be called as effective one for generating or
increasing revenue that exceed that 2016 level.
https://www.stock-analysis-on.net/NASDAQ/Company/PepsiCo-Inc/Financial-
Statement/Statement-of-Comprehensive-Income

3.) What challenges.risk faced by Pepsi?

1. Increased focus on negative health effects of soft drinks

and unhealthy foods.
The risk to PepsiCo is that persistent and continued
emphasis on these effects may curtail soda and snack-
food consumption. Soda makers are banding together
to proactively tackle the issue. In selected cities next
year, they will roll out vending machines that'll not only
display the number of calories in a container of soda,
but also suggest a lower-calorie beverage option. Fast-
food operators have mostly borne the brunt of the
 backlash against unhealthy foods, but PepsiCo could
feel more pressure regarding its salty snacks in the
future.
2. Increased regulatory scrutiny or legislation.
A proposed soda tax aimed at curbing obesity could put
increased pressure on PepsiCo.
3. Restructuring and acquisition costs.
PepsiCo's credit rating was lowered due to the debt it
took on to fund bottler acquisitions. The acquisitions
and restructuring costs will pressure bottom-line
growth in the short term and have the potential to
lower return on investment and increase commodity
cost pressures.
4) discuss the reasonableness of the current stock price