Baker Adhesives
Jacqueline Lau
Stetson Strifler
Tarleton State University
FIN-403/505, Spring Semester, Sect. 010
Dr. Omar A. Esqueda
April 8, 2013

Table of Contents
Executive Summary.........................................................................................................................3
General Background of Organization..............................................................................................3
Overview of Financial Analysis Tools............................................................................................4
Stock Repurchases and the Benefits They Offer.............................................................................5
Alternative Operating Cash Flow …show more content…
Focusing on return on invested capital (ROIC) as the primary way to measure the firm's valuation, Autozone consistently invests in opportunities that lead to top-line revenue growth, ultimately leading to increased margins. As a way to return capital to their equity investors, Autozone has opted to use a share repurchasing program since 1998. Because of their consistent use of the share repurchasing program since its inception in 1998, there has been a 39% reduction in shares outstanding, reducing shareholder's equity to negative $1.2 billion by 2011. Funded by strong operating cash flows and the issuance of debt, Autozone's share repurchasing program has allowed their invested capital to remain relatively stable, creating an attractive ROIC for the firm (Brenner & Eades, 2012).
Overview of Financial Analysis Tools In order to fully understand the value that is generated through a stock repurchasing program, it is important to comprehend the financial ratios that will be discussed in this case analysis. (See Table 1.1)
Table 1.1 Financial Ratio | Formula | Use | Return on Total Assets | Net Income available to CS ÷ Total Assets | Measure of how well management is using its assets to generate earnings | Return on Common Equity | Net Income available to CS ÷ Common Equity | Stockholders invest in order to garner a return, this tells how well they are doing in an accounting sense |