StudentShare solutions
Triangle menu

El-Con Construction Inc - Case Study Example

Extract of sample
El-Con Construction Inc

Rob Lister, the CEO of Oakville Hydo though that El-Con was qualified for the loan based on its recent performance though he did not know if granting the loan was in the best interest of Oakville Hydro company. Based on the company previous performance, there are several ways in which it could maximize and optimize its shareholders wealth. It is therefore recommendable for El-Con to seek different ways of maximizing the shareholders wealth before settling on the best. The best ways or strategies to optimize owners wealth is by ensuring continuous cash flow in the company. Different scenarios on which the firm can optimize its shareholders wealth will be discussed. The different scenarios for considerations include initial public offering and investing its excess funds to maximize profit, obtain a loan to obtain the required funds-Building credit and Shareholder wealth. 1. Initial public offering and investing its excess funds to maximize profit The company should hold initial public offerings and sell them as common stock to the public. Based on the previous performance, the company can thrive well without the common stock but should go for it in order to obtain enough funds to tend to all of its constructions needs. The use of initial public offering will help in profit maximization. Initial public offering will help the company to expand its investments as it will provide the company with enough liquidity. Liquidity ratios 2009 2008 2007 Current ratio 2.8 2.73 3.38 Acid test 2.31 1.72 1.75 Working capital 2.8 2.7 3.4 The current ratio and acid test of the company for the three years was more than 1 which means that the company was in a better position to cater for its liabilities and obligations using its assets. Working capital measures the efficiency of as well as its short term financial health. The ratio determines whether the company has enough short term assets to cover its short term debts. The working capital ratio for the company for the three years is more than 2 which means that the company was not investing in its excess assets and its lack of enough funds can be attributed to that. This means that the company is in a better financial position since its assets outweighs the liabilities and should invest its excess assets to earn income. The company should choose to invest in mutual funds, real property or even insurance products. This will earn the company interest. Investing the excess assets will be a good way for maximizing income by the company which would then earn the company enough capital for the required machinery. Using initial public offering and investing its excess funds will be of help to El-Con as it will help the company to acquire the required liquidity for it to acquire the required machines. The required amount of $450,000 for hydrovac truck and $50,000 to cover its working capital needs is a small amount for the company judging from the past performance and could therefore be acquired by initial public offering and investing in excess assets. 2. Obtain a loan to obtain the required funds-Building credit Obtaining a loan like the loan request from Oakville Hydro could another good way of maximizing the shareholders wealth. Building credit is a deliberate and a planned borrowing which is aimed at increasing the reputation of a firm in the lending market and granting it a larger access to large sums of capital. This greater access of money helps the company in financing stronger expansion and allows it to generate real wealth. The working capital of El-Con for the three years indicates that the current assets are more than the current liabilities which means that it does not have any problems paying for its obligations. As a result, building credit by borrowing ...Show more

Summary

This case is about the different ways through which El-Con can optimize its shareholders wealth. In 2010, El-Con was requesting from Oakville Hydro amount of $450,000 for hydrovac truck and $50,000 to cover its working capital needs. …
Author : magali08
El-Con Construction Inc essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the case study on your topic
"El-Con Construction Inc"
with a personal 20% discount.
Grab the best paper

Related Essays

Nike inc
Along with its subsidiaries, Nike Inc. is engaged in the business of textiles, apparels, footwear and other accessories. It is recognized as a global leader in designing, developing, sales and marketing of athletic footwear and other accessories. It sponsors many well known sports person engaged in different sports all over the world which is a marketing strategy adopted to promote their brand (Nike, Inc., “About Nike, Inc.”).
3 pages (750 words) Case Study
Apple Inc
This research informs about Apple Inc. which was founded in 1976 by Steven Wozniak and Steven Jobs. The writer of the research highlights that the mission statement of the firm points out: “Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork, and professional software”.
2 pages (500 words) Case Study
Certificate of Need (CON)
Case Analysis Name Institution Case Analysis Background Statement The central subject of this case study is that Certificate of Need (CON) was enacted to improve quality health care and increase health care services. Its main mission is to deliver the best health services through reasonable access, cost containment, and public accountability.
5 pages (1250 words) Case Study
Apple Inc
This is the highest market cap in the world and was over $200 billion for second placed Exxon. This high market cap can be attributed to several factors. The first is the release of the highly successful iPhone 5 with the iPhone being the company’s most profitable product.
9 pages (2250 words) Case Study
Dell Inc
has continued to be a leader in the marketplace. Dell's greatest challenge was entering the global marketplace with operations in China. Currently (2004) Dell has 18.2% of the global market share in the computer industry. The company has continued to have increased sales (currently about 8 million).
5 pages (1250 words) Case Study
Octavan Construction Inc
The working capital and the debt to equity ratio has been on the decline which shows that that company is not doing so good on the assets front, the debt to equity ratio has declined and that is not a good sign because the value of the assets has been on the decline and liabilities have grown considerably which is not a good sign for any company
3 pages (750 words) Case Study
Grocery, Inc
Though the case was a bit weak, ultimately, it was Grocery who won the battle. While the agreement clearly stated that the Masterpiece was given the contract at a certain price and had to complete it within the specified time frame, there was no written clause stating that the contract could not be handed over to a sub-contractor.
5 pages (1250 words) Case Study
Bizland ,inc
that the firm faces eliminating its web hosting service because this division was not profitable and it was draining the cash resources of the company. Three success factors for the company are the quality of its human resource, the ability of the company to adapt to market
2 pages (500 words) Case Study
GAP INC
However, the main focus of Gap is not to engage in price wars, the company has maintained its quality which is the main selling point for American products. This paper
7 pages (1750 words) Case Study
Apple Inc
Apple’s success is finally a function its generic strategy. In its strategy to outdo its competitors, Apple employ a strategy based on differentiation and differentiation
2 pages (500 words) Case Study
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation