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Case Analysis of Hope-In Food Store, Incorporate

Scope

The scope of this report is limited within the Hope-In Food Store, Incorporate to determine initial public offering (IPO) and the securities industry of United States. 

Objectives

1. To fulfils the partial requirement of BBA degree.

2. To be able to use theoretical knowledge into practically to determine the offer price for the new stock.

3. To develop our skill in using analytical tools and techniques for determine the offer price. 

4. To develop our interpersonal views and concept through sharing among every member of the group that is reflected in this report.

Limitations

Although efforts made to make the report was as comprehensive as possible, nevertheless, the following limitations are identified at the time of preparing the report:  

1. We worked under a limited time passage.

    2. A lot of information regarding industry, economy, and company are required. 

    3. We have put our optimum effort to formulize the available information

    4. Many analytical techniques and tools are needed to apply to get appropriate result but due to our lack of practical knowledge our analysis may not be a highly efficient one.

Alternative Methodology

Methods of Pricing IPO:

1. Price Earning Multiplier Method

2. Price to Book value Ratio Method 

3. Dividend Discount Model

Company Background

Hop-In Food, incorporated on June 23, 1966 started in Roanoke as a single store selling a broad line of foodstuff and convenience items.

Since 1966, sales had grown at a 55% annual rate, and by the end of 1966, the company operated 84 stores in two states.

Hop- In Food had grown primarily through the acquisition of established stores rather than by the internal expansion, of the 84 stores operating at the end of 1977, 58 had been acquired.

The company pursued this policy of growth by acquisition because experience had proven both the cost and risk of operating a new...