Ethics and Legal Issues in Mergers

If you work this problem as a group assignment, each group member should be prepared to

2. List the four basic types of financial ratios used to measure a company’s performance, give an example of each type of ratio and explain its significance.

Profitability ratio Earnings Per Share Book Value per Share Profit margin on sales Return on assets Return on shareholders’ equity Return on Investment: DuPont Model (ROI) Liquidity Ratio Current ratio Quick ratio (acid test) Working Capital 2009 2008 2007

Assess how the type of market structure impacts your chosen company’s financial performance as measured by performance variables over the past three years. Support your response with data and graphs illustrating two performance variables of your choosing (e.g., sales, net income, stock price) over time.

2. List the four basic types of financial ratios used to measure a company’s performance, give an example of each type of ratio and explain its significance.

• Present 5 years of statements – Ratio – Trend Analysis – See if ratios are improving

The problem to be investigated is the conflict that can arise within companies between doing what is right (or moral) and doing what is often viewed as more important the attainment of corporate goals. This conflict is highlighted in the case study involving Fannie Mae (FM). (Jennings, 2009) In this case, corporate executives choose to focus on corporate goals and meeting the market expectations, ignoring any moral issued witch conflicted with the attainment of their goal. (Jennings, 2009) To understand the reasons for the executives actions and learn from their mistakes and misjudgments the following topics are reviewed: 1) ethics and social responsibility, 2) the importance of devolution, 3) the power and value of incentive plans, 4)

Users are likely interested in information that will assess the company's liquidity, solvency, risk and return, etc. Therefore, they can know more about how is the company financed and the availability of cash to pay debt from the balance sheet. They can know exactly about allocation of the use of cash for different activities from the statement of cash flows. Income statement will provide the information about the revenues and expenses of the company. They can also access information associated with dividend paid and retained earnings.

1. Please conduct a financial ratio analysis using the data in Exhibit 2. How do the results reflect different strategies pursued by the 4 firms?

Current and historical Financial Statements (Income Statement (I/S), Balance Sheet (B/S) and Statement of Cash Flows) from the three most current years for the firm

Return on net assets = Net Income in Statement of Operations / Net Assets in the Balance Sheet

Review of Financial Research Report: This assignment is an analysis of a US publicly-traded company; its common stock could be a prospective investment.  The report is due in Week 10, in needs to be at least 5 pages, and it needs to cover the following topics:

The company’s debt ratios are 54.5% in 1988, 58.69% in 1989, 62.7% in 1990, and 67.37% in 1991. What this means is that the company is increasing its financial risk by taking on more leverage. The company has been taking an extensive amount of purchasing over the past couple of years, which could be the reason as to why net income has not grown much beyond several thousands of dollars. One could argue that the company is trying to expand its inventory to help accumulate future sales. But another problem is that the company’s

How can financial ratios extend your understanding of financial statements? What questions do the time series of ratios in case Exhibit 7 raise? What questions do the ratios on peer firms in case Exhibits 8 and 9 raise?

In 1954, Alpha Plastics was founded near Manchester. And by the mid 1969’s, the company had developed into a medium-sized company with around 6,000 employees. The company was famous for developing and manufacturing a wide range of laminates and industrial adhesives. Also, it had explored the market in synthetic fibre manufacture by take-over. In 1988, Alpha Plastics involved in merger with the Colmar Chemical Company, which is a slightly larger organisation with 8,500 employees and located near Stockport. Colmar produces a variety of industrial chemicals besides plastic and specialises in the production of synthetic fibres. Alpha Plastics believed that the merger would allow taking advantage of