Posted: May 25th, 2022

American Superconductor Case Study

American Superconductor Case Study

Founded in April 1987 with $4.5 million in seed capital from an investment consortium (Google Timeline. American Superconductors. 2010); American Superconductor has grown into a “global leader in renewable energy, providing proven, megawatt-scale wind turbine designs and electrical control systems” (American Superconductors: Investors. 2010). The company works to “develop solutions and manufacture products to dramatically improve the cost, efficiency and reliability of systems that generate, deliver and use electric power” (AMSC. Annual Report 2003). Throughout its two decades of operation the company has needed capital to expand its operations, develop innovative technologies, and invest in capital projects with a design on profitability for the company and its shareholders; a feat the organization achieved for the first time with “$16.2 million, or $0.36 per diluted share, in net income for full year fiscal 2009” (AMSC. Annual Report 2010). The long road to profitability though is marked by difficult management choices regarding how to raise requisite capital. The 2003 article detailing the company’s decision to raise capital through a stock offering rather than utilizing “a 50 million secured debt financing agreement” (Esposito, A. August 26, 2013) was characterized by management as “in the best interest of our shareholders” (Esposito, A. August 26, 2013). The management’s decision provides an opportunity to explicate the positives and negatives of equity as opposed to debt, and whether the company’s strategy was correct given their circumstances.

At the outset there is an important distinction to be made; companies rarely have strictly a one or the other choice between debt and equity, rather there is ratio of debt and equity referred to as the capital structure. For American Superconductor the company’s balance sheet lists approximately liabilities of 11 million in 2003 and 119 million in 2009 respectively. The company prior to the stock offering reported 21 million and 20 million shares issued and outstanding respectively in 2003 (AMSC. Annual Report 2003). A company’s decision on debt or equity also is not strictly a stock issuance or bank financing arrangement, an organization can also consider bond issuance as a form of borrowing. These components comprise what is known as the Weighted Average Cost of Capital; “a calculation of a firm’s cost of capital in which each category of capital is proportionately weighted. All capital sources – common stock, preferred stock, bonds and any other long-term debt are included in a WACC calculation” (Investopedia. Weighted Average Cost of capital N.D.). This calculation in turn reflects an organization’s requisite return on investment for projects. In determining capital budgeting decisions the WAAC provides the foundation for determining the hurdle rate for evaluating potential projects.

The advantages and disadvantages of debt and equity are fairly straightforward however, their implications are critical to business success. In understanding the choice of American Superconductors it is necessary to look at the core differences between debt and equity: ownership of the business, assumption of debt load and required repayment or expected return, and tax deductibility of interest (Kansas Technology Enterprise Corporation. N.D.). These three pieces can then be analyzed in the context of the CEO Gregory Yurek’s three factors leading to the decision to use an equity capital strategy: revenue momentum, profitability of the temperature superconductor motor and generator business unit, and the national energy grid upgrade debate (Esposito, A. August 26, 2003).

Ownership of the business is perhaps the most critical component in the differences between debt and equity financing. The public offering of 4,975,000 shares of common stock is the sale of a portion of company ownership held by the majority stock owners to potential buyers (MarketScreen. October 3, 2003). The stock issuance has two effects. First a reduction of the majority’s percentage ownership of the firm and second a dilution of existing common stock outstanding as a result of the 4,975,000 increase in total issued shares to 26,359,920 (MarketScreen. October 3, 2003). Management “estimates the net proceeds to us of this offering to be approximately $44.0 million based on the public offering price of $9.50 per share” (MarketScreen. October 3, 2003). With expanded ownership of the business by additional shareholders, management will necessarily have to consider organizational decision making in the context of increasing shareholder value. Counter equity and its ownership position with debt which constitutes no ownership stake for the lender, and therefore the business owners are responsible only for repayment of the loan or bond offering according to the terms of the agreement.

Assumption of debt load underscores the financial liability which a firm undertakes with a loan or bond commitment in contrast to a scenario of no new debt if the firm pursues the equity route. With a debt transaction the borrower is legally obligated to pay the bank, lender, or bondholder an agreed upon sum, with interest, over a specified amortization period until the loan or bond is paid in full, called in, or refinanced. American Superconductor would consider whether their operating cash flow would cover the interest generated by the borrowing agreement. A particularly useful analytical tool for this purpose is times interest earned “a metric used to measure a company’s ability to meet its debt obligations. It is calculated by taking a company’s earnings before interest and taxes (EBIT) and dividing it by the

Get Professional Assignment Help Cheaply

Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?

Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.

Why Choose Our Academic Writing Service?

• Plagiarism free papers
• Timely delivery
• Any deadline
• Skilled, Experienced Native English Writers
• Subject-relevant academic writer
• Adherence to paper instructions
• Ability to tackle bulk assignments
• Reasonable prices
• 24/7 Customer Support
• Get superb grades consistently

Online Academic Help With Different Subjects

Literature

Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.

Finance

Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.

Computer science

Computer science is a tough subject. Fortunately, our computer science experts are up to the match. No need to stress and have sleepless nights. Our academic writers will tackle all your computer science assignments and deliver them on time. Let us handle all your python, java, ruby, JavaScript, php , C+ assignments!

Psychology

While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.

Engineering

Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.

Nursing

In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.

Sociology

Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.

Business

We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!

Statistics

We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.

Law

Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.

What discipline/subjects do you deal in?

We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.

Are your writers competent enough to handle my paper?

Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.

What if I don’t like the paper?

There is a very low likelihood that you won’t like the paper.

Reasons being:

• When assigning your order, we match the paper’s discipline with the writer’s field/specialization. Since all our writers are graduates, we match the paper’s subject with the field the writer studied. For instance, if it’s a nursing paper, only a nursing graduate and writer will handle it. Furthermore, all our writers have academic writing experience and top-notch research skills.
• We have a quality assurance that reviews the paper before it gets to you. As such, we ensure that you get a paper that meets the required standard and will most definitely make the grade.

In the event that you don’t like your paper:

• The writer will revise the paper up to your pleasing. You have unlimited revisions. You simply need to highlight what specifically you don’t like about the paper, and the writer will make the amendments. The paper will be revised until you are satisfied. Revisions are free of charge
• We will have a different writer write the paper from scratch.
• Last resort, if the above does not work, we will refund your money.

Will the professor find out I didn’t write the paper myself?

Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.

What if the paper is plagiarized?

We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.

When will I get my paper?

You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.

Will anyone find out that I used your services?

We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.

How our Assignment  Help Service Works

1.      Place an order

You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.

2.      Pay for the order

Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.

3.      Track the progress

You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.

4.      Download the paper

The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.

PLACE THIS ORDER OR A SIMILAR ORDER WITH US TODAY AND GET A PERFECT SCORE!!!