Case 33. California Pizza Kitchen. 1. Background Though CPK has showed strong performance, its stock price has gone down by 10%. Management team started.

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Presentation transcript:

Case 33. California Pizza Kitchen

1. Background Though CPK has showed strong performance, its stock price has gone down by 10%. Management team started to discuss stock repurchase with debts. Since the year of 2000, CPK management avoided putting debts on the balance sheet. Recently CPK issued 50% stock dividend (3 for 2 stock split effect).

2. Questions 1) Summarize the business of California Pizza Kitchen and Restaurant Industry. 2) How much is needed to borrow to repurchase stocks in order to improve stock price? 15.6 in Ch15. 3) What is weighted average cost of capital at the optimal borrowing level? Section 15.5 in Ch15. 4) What is EPS at the optimal borrowing level?

5) How about voting control issue or debt rating?