Pan-Europa Foods Case Analysis - 1071 Words

Pan-Europa Foods Case Analysis Executive Summary Pan Europa foods is a European producer of yogurt, ice cream, bottled water, and fruit juice. With stagnant gross sales and decreasing stock value, the company needs to increase its net income and increase confidence in its shareholders to avoid a takeover. With this in mind, the company decides to allocate $80 million Euros out of its $656 million asset base to capital spending in investment projects. There are currently 11 proposals on the table totaling $208 million from which the Senior Management Committee must choose from. Currently the company has two financial measures to determine if projects are economically sufficient for the firm, minimum acceptable IRR and maximum†¦show more content†¦The effluent project can be evaluated with non-quantitative methods, such as factoring in the positive or negative image of the brand as a result with compliance or non-compliance with the environmental regulations. In quantitative terms, the firm would be incurring less of a loss if it paid $4 million now opposed to $10 million later. 3.) Aspects of the projects that could invalidate the above ranking: * Customer’s perception of the brand as a result of the project * Uncertainty of results * Availability of Resources * Government Regulations * Whether it aligns with the firm’s goals The firm can correct for each of the following factors: * Time value of money use NPV * Unequal Lifetimes use equivalent annuity * Riskiness increase required rate of return for riskier projects * Size use profitability ratio 4.) Reconsideration of projects in terms of: * â€Å"Must Do† – The effluent water project is a â€Å"must-do† because the firm will be required to comply with environmental regulations in the future. * Elements of riskiness – The uncertainty in a project’s outcome, in terms of the final cost and expected results can implyShow MoreRelatedCase Analysis Pan Europa Essay943 Words   |  4 PagesCase Study PAN EUROPA FOODS S.A C. Opitz and R.F. Bruner By Your Name Table of Contents 1. 2. 3. 4. 5. 6. Executive Summary: The report is to provide the shareholders with the firm’s capital budget for the new year, 1993. 11 projects will be examined and discussed. Projects will be chosen based on the most needed and urgent projects and based onRead MorePan Europa s Main Issues1602 Words   |  7 PagesII. Issue Identification Pan-Europa’s main issues can be divided into three parts, the first and most important being their financial struggle. 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