Hill Country Snack Foods Co. Case Study

Running head: HILL COUNTRY SNACK FOODS CO.

Hill Country Snack Foods Co.  

Juliana Sanchez

Applied Managerial Finance II

Dr. Bullen

September 19, 2016

Table of Contents

Case Summary 1

Type chapter title (level 2)2

Type chapter title (level 3)3

Type chapter title (level 1)4

Type chapter title (level 2)5

Type chapter title (level 3)6

Case Summary

Hill Country Snack Foods is a company located in Austin, Texas. This company manufactures, markets, and distributes a variety of snacks. Catering to different types of customers this company has expanded its presence to sporting, movie theaters, and other events were the people are more likely to buy snack foods. The success the company had was due to the efficient operations, quality of products, and their strong position in a region that was growing in population and economically. The current CEO Howards Keener is 62 years old has worked for the company for over 15 years and is soon to retire. Keener is passionate about maximizing the shareholders’ value making this the companies entire corporate culture which was applied to all of the levels of the organization including the operating decisions. They also believe in having a tight control on the costs but having the company operate as efficiently as possible. Hill Country Snack Foods only invests in new capacity and new products only if it’s attractive and if there are low risk opportunities the company would fund them internally. Additionally the company risk avoidance could be seen in the financial decisions it took. The CEO preferred equity financed over debt finance; believing that a balance sheet with large amounts of cash gave the company safety and flexibility. As the CEO faces retirement the company might follow a more aggressive capital structure.

Capital Structure of Hill Country Snack Foods

Hill Country Snack Foods currently has a 0% debt and they fund its operations from its equity, generating no interest that could contribute to the net income. It also has excess liquidity and had a lack of debt financing. This would cause for the company to reduce their return on assets making them not able to build their credit standing when they needed funds. Even with a slight restriction to cash, increase to debt and reduction to the owner’s equity the company would increase their return to equity. At the end of 2011 as mentioned before Hill Country Snack Foods had zero debt and the cash balance that equaled to 18% of the total assets.