Sealed Air Essay

a. Sealed air corporation is one of the world market leaders in packaging products. Between 1987 and 1988, management decide to focus on the manufacturing aspect rather than focusing mainly on sales and marketing due to increasing competition from rival companies. Sealed Air inefficiency within its factories made them keep too much inventory leading them to low inventory turnover. The management launched a program called World Class Manufacturing to promote manufacturing within Sealed Air. The collection period in 1987 was 69.29 days and 73.76 days in 1988 meaning it took longer to collect credit sales. Sealed air inventory turnover ratio did not change between 1987 and 1988 staying at 6.4 the payable ratio in 1987 was -39.56 and in 1988 38.69 meaning no significant changes but maybe a drop in payments.

Sealed Air has executed its leverage recapitalization by borrowing more $300 million which of 136.7 million under a $210 million secured bank credit agreement with Bankers Trust Company acting as an agent of syndicate of banks and $170 million in subordinated bridge notes. Sealed Air issued the borrowing to payout the 329.8 million in dividend for shareholders at $40 per/share. In doing the leverage recapitalization, they were able to pay the shareholders which kept them happy as in the future increase the company’s return. Due to this, the company ended up with a negative net worth of $160 million. The borrowing gave Sealed air to change their priorities and incentives to operations. They had five objectives they wanted to accomplish accordingly. Putting customers first, cash flow, WCM, innovation and earnings-per share. In 1989 the gross profit margin rose from 115.4 to 134.5 as well as EBDITA rising from 69.9 to