Case Summary: Topline Container Corp.
Topline Corporation Corp. is a cardboard container and paper products manufacturer company which was founded by Joseph Stone in 1926. The company was growing slowly with acquisitions. With time the company issued its shares and began to acquire and diversify more. The industry was capital intensive so it incurred huge amount of fixed costs. The firm kept on acquiring to have control on other firms. When we see the financial statements of the firm we found that with time the Return on sales was decreasing. The return on total capital was also decreasing. The return on equity was lowering and the debt to total capital was increasing. This was an alarming situation for the firm. In the whole case we found out that there is a high financial and operating leverage which was moving downwards. The challenge for the company was to payback the large amount of debts. Even the firm was not able to decrease the operating cost as it was one of their main factor. The only way the company had is to bring down the financial leverage. Thus the company had to take decision depending upon the alternatives given to improve their financial condition. At the present economy probably it would be very difficult for the company to deal with the situation, probably the only way to get off the debt would be by selling few manufacturing units.
