Case Detail

Case Summary

Bed Bath & Beyond: The Capital Structure Decision

Case Number: 5-204-270, Year Published: 2004, Revision Date: April 01, 2007

HBS Number: KEL082

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Authors: Artur RavivTimothy Thompson; Phillip Gresh; Shannon Hennessy

Key Concepts

Capital Structure, Leverage, Debt, Leases

Abstract

Bed Bath & Beyond (BBBY) had no long-term debt on its balance sheet. Although many analysts considered BBBY’s balance sheet a strength that permitted greater flexibility, some commented on the risks of its growing cash balance. These concerns raised questions about BBBY’s capital structure. In early 2004, interest rates were at an all-time low, making it an attractive time to consider issuing debt and executing either a share repurchase or a one-time special dividend. This case provides a few capital structure proposals and students are asked to analyze those proposals.

Number of Pages: 14

Extended Case Information

Teaching Areas: Finance

Geographic: United States

Industry: Retail

Organization Name: Bed Bath & Beyond

Organization Size: Large

Year of Case: 2004