California Pizza Kitchen Example

 California Lasagna Kitchen Example Essay

п»їCalifornia Pizza Kitchen

California Pizza Kitchen was first created in 1985 in Beverly Hillsides, California. By simply 2007 there have been 213 spots throughout 28 states and 6 countries. Although 41% of the stores were based in California, keeping with the restaurants theme, the dining style flourished through the entire United States. To get the second one fourth of 3 years ago, although they were faced with industry problems such as elevated commodity, labor and strength costs, they were still likely to break quarterly records with over $6 million in profits. Even though experienced very good performance, the share cost had declined 10% into a current benefit of $22. 10. Leslie Collyns, CFO, and her team were faced with the decision of any share repurchase program. They'd little money in excess cash though, and so a repurchase agreement means debt loans. A reveal repurchase would send an optimistic signal towards the market, with future beliefs expected to always be high. The financial crew also needs to make a decision on the appropriate capital structure. Because of the low interest rates, CPK can concern the debt required for a repurchase agreement for a low cost. As well because they may have no past debt, this could not become a large risk and it will in fact increase the benefit of CPK due to reduced taxes, which usually comes from the tax defend. The influence from show 9 features different results for return on fairness and expense of capital. To get return on equity, as you may increase leverage, the ROE increases too. At 10% debt/capital, ROE is on the lookout for. 52%, 20% debt/capital, ROE is 12. 19%, and 30% debt/capital, ROE is 11. 05%. Using the beta equation to get the effect on cost of equity, you will see that it improves as well when the leverage improves. For 10% debt/capital, the beta of equity can be. 87 and cost of value is 16. 34%, 20% debt/capital, beta equity is usually. 89 and cost of value is 18. 56%, last but not least 30% debt/capital, beta value is. 915 and expense of equity is definitely 14. 84%. These raises also suggest an increase in likelihood of the company because...


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