CASE HARVARD: United Grain Growers Ltd. (A) (18)

1. You can UGG finance its growth plans with internal sources of capital
2. Are “reliable” and “predictable” with some degree of predictability? internal sources of capital
3. If you need external financing, how much would you need?
4. Why UGG is interested in investing in high-throughput elevators?
5. Why UGG adjacent businesses want to invest in (Crop protection & Live stock services)?
6. Identify the risks faced UGG against its impacts on different “lines” of their status Profit and Loss and Balance:
7. Sales
8. Operating costs
9. Extraordinary costs
10. Work capital
11. Investment needs
12. Cost and availability of financing
13. Measuring exactly the EaR (Read Why Manage Risk reading of the Syllabus)
14. As calculated the EaR? Which would describe the calculation method conceptually. The key to describing this calculation are the distribution of rainfall, the relationship between rainfall and the yield per hectare (yield) and the relationship between yields and earnings of UGG.
15. From the point of view of M & M, investors can always mitigate risk through diversification? Why diversification is not an option valid for shareholders of UGG?
16. In case UGG decided to take on debt to finance their investments, why the pressure of debt (bankruptcy costs) adds urgency to risk management?
17. Which increases the likelihood of financial distress? It is this relevant factor for UGG?
18. Discuss when it would be suitable for UGG mitigate the risks to which it is subjected. He believes that the conditions exist for UGG decides to implement its risk management policy?
19. The case begins with the quote: “Everybody talks about the weather but nobody does anything about it”. Why it is not easy to mitigate climate risk?
20. If you had to decide on how to mitigate the risk climate, which instrument would you use? A secure? A derivative of temperature? A derivative of the level of rain? Would he be able to design an OTC derivative to better mitigate risk climate?

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