Basic financial concepts

1.Executive Summary The case study has been approached from different valuation methods to ascertain if there is value in the acquisition of Southern Comfort. These methods all yield the same result, i.e. Southern Comfort is expensive at the asking price of $94.6million. The valuation methods also examined the reasonableness of the acquisition using methods such as Free Cashflow Analysis, Book Value methods and Price Earnings ratios analysis The qualitative aspects have also been analysed to

Capital Structure Theories Capital Structure Capital Structure is the proportion of debt, preference and equity capitals in the total financing of the firm’s assets. The main objective of financial management is to maximize the value of the equity shares of the firm. Given this objective, the firm has to choose that financing mix/capital structure that results in maximizing the wealth of the equity shareholders. Such a capital structure is called as the optimum capital structure. At the optimum

return on equity: The second proposition of Modigliani and Miller it states that as the financial risk rise the higher the shareholders’ rate of return. Financial leverage increases the risk of a shareholder since it increases the variability of the EPS and the ROE, this behaviour has got two directly proportion effects, Increase in the shareholders’ return however, it also increases the shareholders’ financial risk. As per this effect the shareholders’ are expected to increase their return to be

American Home Products Case Write-Up 1. A combination of business risk and financial risk shows the risk of an organization’s future return on equity. Business risk is related to make a firm’s operation without any debt whereas financial risk requires that the firm’s common stockholders make a decision to finance it with debt. Business risk can be evaluated volatility in earnings and profits (coefficient of variation of returns on assets and of operating profits). A measure of business risk

To: Dr. Lynna Martinez Subject: Calaveras Vineyards Valuation As per your request, my associates and I have calculated a valuation for Calaveras Vineyards using the present value of cash flows. We used the valuation of future cash flows method in order to value to value the company. We have come to the conclusion, based on a number of future projections, that the best valuation of the vineyards is $4,356,000 in assets and $1,104,000 in equity. The process at determining this valuation was as

The results obtained from the cooperation of Modigliani and Miller in 1958, was an attempt to prove that the financial decisions should not be significant in the perfect conditions of the market, after being published the Modigliani and Miller theory became the main theory of the capital structure. In the M&M theory it suggested that the market is fully efficient, meaning that there are no taxes, however in the theory Modigliani and Miller included the taxes to be able to reflect their theories in

Entry into a foreign market demands that business leaders carefully weigh the most effective strategy. The most important choice an organization would need to make prior to entering a new market, is determine if their mode of entry should involve an equity stake or not (Evans, 2005). This paper will present two theoretical business scenarios that would be best served by either a non-equity entry or an equity based entry. Non-Equity Based Market Entry Peng (2014) provides the example of exporting

Active Gear, Inc. (AGI), a privately held athletic and casual footwear company, contemplated an acquisition opportunity of Mercury that would significantly improve his business. So, he wanted to evaluate this opportunity. This paper introduces the basic situation and feathers of current athletic and casual footwear industry and raises that active management of

The Basic Concepts Upon Which Financial Accounting is Based Terms of Reference To prepare a short report, which will explain the basic concepts upon which financial, accounting is based. The need for accounting standards and why companies must comply with them. The Need for Accounting Standards In order for the Profit and Loss and Balance Sheets accounts to make sense to users who rely on them for their decision making purposes, there has to be consistency

properties of such subsets. Recently, Khedr et al. [5] have investigated the notions of semi-preopen sets and semi-precontinuity in bitopological spaces. In 1995, Nasef and Noiri [6] defined and studied the concept of strongly  - irresolute functions. The purpose of the present paper is to extend the concept of strongly  -irresoluteness to the setting of bitopological spaces. Throughout the present paper, (X, 1, 2) and (Y, 1, 2) always mean bitopological spaces. For a subset A of a space X, i-c1(A) (resp