Case Study: "American Home Products Corporation" (Capital Structure Decision)

American Home Products Corporation1. CASE SUMMARYAHP Chief Executive?I hardly don?t like to owe cash?, verbalize William F. Laporte, AHP chief executive, when asked about his company?s just about debt-free symmetry sheet and growing cash reserves. Mr. Laporte had taken foul up ensemble over as chief executive of American Home Products in 1964. passim 17 subsequent geezerhood of his tenure Mr. Laporte has not changed his imprint of debt financing and AHP?s self-denial from debt continued, while the growth in its cash balance outpaced telltale(a) growth in two sales and earnings. At the dying of 1980, AHP had almost no debt and a cash balance qualified to 40% of its net worth. explanation of the CompanyAHP? 1981 sales of more than $4 billion were produced by over 1,500 marketed brands in four lines of short letter: prescription drugs, packaged drugs (i.e. copyrighted or over-the-counter), food harvests, and housewares and nursing home products. Consumer products i ncluded a motley of well-known brand names, such(prenominal) as Anacin, Preparation H, Sani-Flush, Chef Boy-Ar-dee, florin?s Mustard, Woolite, and the Ekco line of housewares. AHP?s success in these lines of business was built on market expertise. Whether the product was an oral hitch or a hind end bowl cleaner, ?they sell the funny house out of everything they?ve got?, verbalize one competitor.

AHP?s Distinctive in collective CultureAHP had a distinctive corporate culture that, in the pull in of many observers, emanated from its chief executive. This culture had several components:Reticence. A crownwork crown of Wall Street analysts ranked AHP last in corporate communicability amo ng 21 drug companies. Frugality and tight f! inancial control. Reportedly, all expenditures greater than $500 had to be personally approve by Mr. Laporte even if authorized in the corporate budget. conservatism and insecurity aversion. AHP consistently avoided much of the risk of new product victimization and introduction in the volatile drug industry. nigh of its... If you pauperism to get a full essay, order it on our website: OrderEssay.net

If you want to get a full information about our service, visit our page: write my essay