|Case Title||Massey Ferguson Ltd. 1980||Price||$75|
Proforma Balance Sheet (US.$ millions)Year Ended October 31, 1981 - 1985
Proforma Income Statement (US.$ millions) Year Ended October 31, 1981 - 1985
Analysis of Sales
Compound Growth Rate
New Shares Issue
New Preferred Shares Issue
Total no of preferred Shares
Dividend per year
Massey- Ferguson Limited, a multinational manufacturer of diesel engines, farm and industrial machinery. By 1980, Massey was the largest supplier of diesel engines and west’s largest producer of farm tractor. Between 1960 and 1970, Massey had a plan to expand operations and acquire assets through short term debt financing. By 1978, Massey stood at 214% of debt to equity ratio. In the same year, Massey reported an unprecedented year end loss of U.S. $262.2 million. Furthermore, high interest rate along with reduced sales in coming years aggravated the situation and by the end of 1980 the debt to equity ratio raised to 464%. All these circumstances lead Massey-Ferguson into financial crises.
|No of Words||1222|
1. Assess the product- market and financial strategy Massey pursued throughout 1976.How does Massey differ from its competitors?
2. As a financial advisor to Massey's management, what refinancing plan would youpropose? Be specific - Hint: Use Proforma financial statements to make sure yourproposed plan is viable.
3. How does the plan affect various interested parties: shareholders, lenders, employees,governments and management?
4. Why, fundamentally, did Massey get into financial trouble?
|Keywords||Bankruptcy,Financial planning, Financial strategy, Machinery, Recapitalization, Short term financing|
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