OtherPapers.com - Other Term Papers and Free Essays
Search

Service Corporation International

Essay by   •  July 31, 2017  •  Case Study  •  551 Words (3 Pages)  •  993 Views

Essay Preview: Service Corporation International

Report this essay
Page 1 of 3

Service Corp. International Case

                        Jinwei Wang A52952307

1. Should SCI continue to grow?  Is this strategy optimal for shareholders?  How

    Would you go about assessing the profitability of SCI's growth strategy?

From Exhibit 4

years

1989

1990

1991

1992

1993

1994

1995

Revenue

Growth

rate

15.01%

8.56%

14.22%

20.07%

16.42%

24.23%

47.70%

Profit

Growth

rate

10.02%

12.94%

18.79%

24.51%

18.65%

29.54%

50.73%

Net income

Growth

rate

-554.72%

-224.9%

21.93%

17.85%

16.88%

29.57%

37.40%

Acquisition cost-net income ratio

-89.21%

139.53%

508.17%

235.84%

218.60%

621.37%

666.67%

DPS

Growth

rate

16.13%

2.78%

0

5.41%

2.56%

5%

7.14%

Retention

rate

-136%

56.5%

64.1%

65.5%

66.9%

72.2%

73.4%

  From this data table we can see that the revenue, the profit and the net income of SCI was growing steadily from 1989 to 1995. However,the divide per share grows very slow .And additionally, the acquisition cost was far exceed the net income, and SCI had to maintain a high retention rate to provide fund for acquisition and interest expense.

                                        From Exhibit 7 Exhibit 8

years

1992

1993

1994

ROE

12.7%

11.7%

10.95%

P/E(stock price at the end of the year)

16

21

18

  From above we can know that the company had the normal ROE ,12.7%,11.7% and 10.95%.And the price-earning ratio were also not very high, they were 16,21, and 18. Although, SCI had relatively high revenue rate and high revenue growth rate, high net income growth rate.The dividend per share growth rate was not reasonable compared to its revenue and net income growth rate.What’s more, its ROE and PE were also ordinary. In order to pay the acquisition cost, SCI maintained a high retention rate. SCI can expand its scale by acquire more corporations.However, SCI needed to raise more money to pay the acquisition cost.This is not good for the shareholders.

...

...

Download as:   txt (3.7 Kb)   pdf (81 Kb)   docx (10.4 Kb)  
Continue for 2 more pages »
Only available on OtherPapers.com
Citation Generator

(2017, 07). Service Corporation International. OtherPapers.com. Retrieved 07, 2017, from https://www.otherpapers.com/essay/Service-Corporation-International/61389.html

"Service Corporation International" OtherPapers.com. 07 2017. 2017. 07 2017 <https://www.otherpapers.com/essay/Service-Corporation-International/61389.html>.

"Service Corporation International." OtherPapers.com. OtherPapers.com, 07 2017. Web. 07 2017. <https://www.otherpapers.com/essay/Service-Corporation-International/61389.html>.

"Service Corporation International." OtherPapers.com. 07, 2017. Accessed 07, 2017. https://www.otherpapers.com/essay/Service-Corporation-International/61389.html.