Polaroid

POLAROID CORPORATION Prepared by: Aleeva Kamilya

The main problem 





Bond ratings: Polaroid currently had a ‘split’ rating between Standard and Poor’s (BBB and !oody’s (Baa"# This debt rating was considered investment grade whereas the ne$t lower rating was considered noninvestment grade# The lower rating will lead higher %inancing costs possible damage to the Polaroid brand name i% it was associated with &un' bonds le$ibility: )* wanted to enhance the %le$ibility o% the company (the amount o% debt that can be issued while maintaining the investment bond rating# !inimi+e the )ost o% )apital to !a$imi+e ,alue )reation: The debt policy that minimi+ed the cost o% capital and too' advantage o% debt ta$ shields could create value %or the shareholders#

*ptimal Bond rating Key .ndustrial inancial /atios

S&P ating

 Actual 0112

Pro&ected

Current

0113

0114

0115

0111

6777

"-27

8-"4

8-54

2-04

2-2"

"-18

8-5

2-"

2-3

2-5

3-7

3-77

62<

"0<

"2<

"4<

87<

""-"7<

ree operating cash %low;total debt (term debt (