CASE STUDY Essay Example | Topics and Well Written Essays - 750 words - 4

CASE STUDY - Essay ExampleIn 1972 the company reported Net Income of $172.7 million that increased by to a greater extent than hundred percent to $497.3 million.The fiscal performance of the company was characterized by steady and consistent harvest and rising profitability. AHP increased r pull downues, earnings and shareholders dividends for straight 29 years. The company managed to retain the growth in the range of 10 percent and 15 percent in recent years. This growth was financed by the company through internal means even though it paid roughly 60 percent of the earnings as dividends.The earnings growth of the company boosted the share price of the company by well three times. The steady growth in sales and rising EPS made the shares of the company an attractive buy among the institutional investors. The low debt exposure of AHP seemed to work in favor of the company as it gained wider acceptance from the institutional investors. To couple with this the steady rise in the ret urn on equity of the company seemed to attract more number of buyers which can be the reason for the three fold rise in the share price of the company.The cash flow position of the company was as well very strong as evident from the steady rise in the Cash position of the company. In 1976 the company had Cash of nearly $358.8 million that grew to $729.1 million. steady though the company declared a generous portion of the profits as dividend the cash reserves of the company kept rising steadily. In detail the growth in cash reserves even outpaced the growth rate in sales and profits. This ensured that the liquidity position of the company remained strong. A high liquidity, as measured by a high current ratio, is a good sign as it signifies that the company is capable of taking care of any financial emergency (Siegel, et al., 1997, pp80).Warner Lambert was the only company that was comparable to AHP. Like AHP the former also operated in roughly the same businesses and had a debt