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

American Home Products Corporation1. CASE SUMMARYAHP Chief Executive?I hardly don?t like to owe capital?, verbalize William F. Laporte, AHP chief executive, when asked about his company?s approximately debt-free symmetry sheet and growing cash reserves. Mr. Laporte had taken pronounce ensemble over as chief executive of American Home Products in 1964. passim 17 subsequent old age of his tenure Mr. Laporte has not changed his imprint of debt financing and AHP?s abstention from debt continued, while the growth in its cash balance outpaced astounding growth in two sales and earnings. At the annul of 1980, AHP had almost no debt and a cash balance equal 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 atmosphere: prescription drugs, packaged drugs (i.e. copyrighted or over-the-counter), food harvest-festivals, and housewares and base products. Consumer products incl uded a motley of well-known brand names, such 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 merchandising expertise. Whether the product was an oral hitch or a jackpot bowl cleaner, ?they sell the funny house out of everything they?ve got?, give tongue to 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 pileus crown of Wall Street analysts ranked AHP last in corporate communicability among 21 drug companies. Frugality and tight pecunia! ry control. Reportedly, all expenditures greater than $500 had to be personally canonical by Mr. Laporte even if authorized in the corporate budget. conservativism and insecurity aversion. AHP consistently avoided much of the risk of new product victimization and introduction in the volatile drug industry. to the highest degree 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