The CFO of Fleetwood Enterprises is considering whether to recommend a large share repurchase to the board of directors. Fleetwood's core businesses, manufactured housing and recreational vehicles, are very sensitive to business cycles and oil prices. Following Iraq's invasion of Kuwait, Fleetwood's stock price dropped more than 20%, but Fleetwood appears strong enough to both survive a severe downturn and repurchase a large block of shares. Designed to permit a thorough review of basic capital structure, dividend payout, and share repurchase theories, in the context of a large firm facing both a potential crisis and a valuable opportunity.
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