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50 views

Final Winfield Powerpoint

Uploaded by

api-742568413
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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You are on page 1/ 14

Offering

Insights for
Winfield Refuse
Management
Meet the Team

Michael Mendoza Rachel Wertz Adriana DeFanti Josh Krieger


Background

Financing
Table of
Debt Versus Equity
Contents
Overview of Debt Option

Final Recommendation
1972: 2-Truck
Operation in Missouri

2012: Served 500,000


industrial, residential,

Winfield Background
commercial residents

Acquired multiple
smaller companies ▪ Non-hazardous waste company
▪ Great operational efficiency
▪ Disappointing stock over the past few years
Assets: 22 landfills, 26
transfer stations, 33 ▪ Previous long-term liabilities
collections operations

Currently: Attempting
to acquire MPIS
Why External Financing?

Generally: For Winfield Specifically:

• Covering operating expenses • Disappointing previous stock


• Avoiding bankruptcy • Market and competitive pressures
• Improving credit rating • Size of MPIS acquisition requires
• Expedite growth external financing
Short-term Obligations Consideration
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 $83,559
Current Ratio: → = 1.2994
*In millions
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 $64,301
• More assets than liabilities → has enough money to cover its current debt

𝐶𝑎𝑠ℎ + 𝐴𝑐𝑐𝑜𝑢𝑛𝑡𝑠 𝑅𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒 $27,330 + $48,741


Quick Ratio: → = 1.1830
*In millions 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 $64,301
• More liquid assets than current obligations→ has enough liquid assets to meet its short-term obligations

Working Capital: $83,559 - $64,301 = $19,258


*In millions
• Positive Value: has enough short-term assets to cover short-term debts

Yes, Winfield can cover Short-term Obligations.


Financing Background
Equity Financing: Raising capital by selling ownership shares in a
company​
• Investors receive ownership stakes/shares​ in exchange for capital

Debt Financing: Raising capital by borrowing money from external


sources​
• Banks, financial institutions, individual lenders
• Company must repay amount
• Includes interest
Debt vs. Equity Consideration
Debt Equity
Pros Cons Pros Cons
• Immediate capital • Pay back with • No repayment or • Loss of
interest interest independence
• Tax-deductible
interest payments • Risk of financial • Capital • Profit sharing
strain preservation
• Retain control • Lacks tax
• Qualification • No additional benefits
• Easier requirements financial burden
budget forecasting • Potentially more
• Potential liability expensive
• Obligation to
repay money
Time Value of Money’s Impact

Starting with 125M but expecting to pay more over time….


● With debt, there will be annual interest (4.23%)

● Interest payment shrinks cumulatively

● Value of the company grows over time while paying off debt
Debt Financing
Principal Amount Annual Interest Payment Yearly Payment
(millions) Re-Payment (millions) Interest Rate Year (millions) (millions)
125 6.25 4.23% 1 5.28125 11.53
118.75 6.25 4.23% 2 5.0171875 11.27
112.50 6.25 4.23% 3 4.753125 11.00
106.25 6.25 4.23% 4 4.4890625 10.74
100.00 6.25 4.23% 5 4.225 10.48
93.75 6.25 4.23% 6 3.9609375 10.21
87.50 6.25 4.23% 7 3.696875 9.95
81.25 6.25 4.23% 8 3.4328125 9.68
75.00 6.25 4.23% 9 3.16875 9.42
68.75 6.25 4.23% 10 2.9046875 9.15
62.50 6.25 4.23% 11 2.640625 8.89
56.25 6.25 4.23% 12 2.3765625 8.63
50.00 6.25 4.23% 13 2.1125 8.36
43.75 6.25 4.23% 14 1.8484375 8.10
37.50 6.25 4.23% 15 1.584375 45.33

Total Payment: 182.74 182.74


Debt Financing Ratios

Current Ratio: Current Assets $83.559


Pre-Debt *In millions = 1.2994
Current Liabilities $64.301

Post-Debt Current Ratio: Current Assets $83.559


*In millions
= 1.1019
Current Liabilities $75.831
Debt Financing Ratios
Long Term Debt to Equity Ratio: Long Term Debt $125
*In millions
= 0.186
Shareholder Equity $699.57

Company Long Term Debt-Equity Ratio


Waste Management 1.5

Republic Services 0.9

Waste Connections 0.6

Progressive Waste Solutions 1.1

Casella Waste Systems 26.2


Final Recommendations

• We will be financing the acquisition of MPIS through debt

• More control over company, do not lose ownership


through stock dilution

• Calculations show that Winfield will still be able to cover


short term obligations and be well below the industry
standard debt-equity ratio
Thank you!
Any Questions?

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