1. Hampton Machine Tool Company Case
Until Dec 1978, the company maintained a capital structure of zero debt. In Dec 1978, the company obtained a $1 million loan @ 1.5% monthly from our bank in order to repurchase company's stocks from dissident shareholders. ... It experienced high profitability in 1960s due to booming automobile market and heavy defense spending associated with the Vietnam War. However, in mid 1970s, the company experienced a severe decline in sales and profitability due to plummeting automobile market affected by Arab oil embargo, high price of gasoline as well as massive reduction in defense spending pos...
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