Professional Documents
Culture Documents
Products
Choice of the Optimal Capital
Structure
By ab
Case Facts
• Company has almost debt-
free balance sheet and
growing cash reserves(40% of
net worth in 1981)
• Over 1500 heavily marketed
brands in four lines of
business : prescription drugs,
packaged drugs, food
products, houseware &
household products
• More than $4 billion sales in
1981
AHP’s Corporate
Culture
Continued……
•Conservative capital structire :
Excess liquidity and low degree
of leverage
• Basis of selection:
shareholder value
maximization
• As a result, there is a
significant reduction in the
taxable income thereby
reducing the corporate
taxes
Disadvantages of the
Recommendation
Risk Analysis
• Business risk: