The World 's Largest Nickel Producer

Decent Essays

Question 1 Sub question 1.1 At the beginning of the summer, one (Phelps Dodge) proclaimed a three-way merger in the mining industry, which would result in the world’s largest nickel producer and largest publicly traded copper producer. Prior to this announcement, there were some rumours that Xstrata would like to take-over one of the three parties, in particular Falconbridge. The fact that Xstrata had already obtained a fifth of the last-mentioned firm’s outstanding shares, confirmed these rumours. Falconbridge protected himself against this threat by the implementation of a “poison pill”. Officially termed in the specialist literature as Shareholder Rights Plan. It gives the non-hostile shareholders a right to purchase additional shares …show more content…

A short overview of the relevant data is composed in Appendix 4. The return on equity is very high, it had a large increase in the last three years, due to a higher increase of the net profits (x2.88) than the shareholders’ equity’s increase (x1.77) during the past three years. The management anticipates this in a proper way by investing in more assets, it emerges in a stable asset turnover and financial leverage. Appendix 5 gives a comprehensive operating management analysis. Operating management A firm’s net profit margin assesses the efficiency of the firm’s operating management. The improvement of the net profit margin shows a better operating management; lower operating costs but this effect is partly offset by higher tax expenses. For Phelps Dodge, we see that the NOPAT margin increases over the presented years. The increase of the NOPAT margin is an effect of the increase of the net profit. We

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