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INDUSTRIES CASE
Rohan Raj Mishra
PFM 09-11
IIFM Bhopal
Brief
Summary
High Rock Industries (HRI) was engaged in purchase of
underdeveloped acreage which was then developed for industrial
use.
•Yes
•Commercial development in
vicinity
•Rapid Transit System
Equity Preffered
Present Finance Debt Finance Equity
Times Interest
Coverage
Ratio 1.86 2.23 1.89 2.23
Looking at TIC and Debt
Ratio
Decision Criteria
Net Income
Return on Assets & Equity
Debt Ratio
Times Interest Coverage
The Question about Sinking Fund
Current rate is 7%
Sinking fund investment with installment of
$400,000 p.a.
Additional information that could be useful
Industry information on
Bond ratings
Debt-ratios
Market conditions
State of capital markets
Interest rate trends
What flexibility in future after Debt financing?
• As capital is raised, the choice among alternatives for raising capital in the
future may be narrowed