...last year in core business with announce fresh deal. With announce plan to acquire Annie’s, an organic-food marker, with 37% premium to the share price in the deal. Because organic and natural foods is more attraction than traditional brands such as General Mills. General Mills tried to cut costs and shrink capacity to finish deal and respond to week demand. But Investors and markets response is not good. The share price is declining 3.7% in afternoon trading. From the article, we can know, the operating environment quite challenging recently. The overall news for General Mills said total revenue and earnings are declining. The overall performance missed expectations that Wall Street analysts came out. From the article, I think this deal is not good. Nearly a week ago, I have saw general mills to buy Annie’s Inc. on Wall Street Journal for 820 million dollar, was 37% premium to the share price before the deal. Right now, Wall Street Journal published “General Mills Drops 25%”, which means markets are down on this deal. Also, investors shrug off this deal. Obviously, stock price were decreasing in afternoon trading afternoon, which was down 3.7%. Market reaction is not good. Also, under the bad situation during the whole industry, General Mills cuts costs and shrink capacity to try acquire Annie’s with 37% premium to the current share price in the deal. The action seems not wise. With continues lower earnings, company still perform risky behavior. The result turns out performance...
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...Valuation analysis of Regal Entertainment [pic] Objective To value a company listed on major stock exchange. Summary We selected Regal Entertainment, the largest motion picture exhibitor in the US and based on our fundamental analysis including industry analysis, company analysis and financial analysis, the company is a ‘HOLD’ with a positive outlook. Approach & Methodology Industry Research: We identified the main competitor and key drivers and trends in the industry. Company Research: We gathered information of the company historical performance and market positioning vis. as vis. its peers. Company projections: We developed a full three statements financial model to forecast the company’s operation based on the industry analysis and company’s track record. Valuation: We have used APV approach to value the company as company’s capital structure keeps changing over time. Furthermore, we also calculated the implied valuation using trading and transaction multiples. Industry Overview Resilient industry The US movie exhibition industry is considered a relatively defensive industry with low revenue volatility. Main reason for this is that the American customers’ willingness to go to the movies is less correlated with the economic cycle. People go to the movies both in the good times and in the bad times. Thus, box office performance can vary widely quarter to quarter due to films released, but is generally steady in longer term (see figure 1). The box office...
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...In order to determine whether a strategy is a winning strategy, the company’s strategy must pass three tests, which include the fit test, the competitive advantage test, and the performance test. Passing the fit test means the strategy is well matched to the company’s situation. Moreover, the competitive advantage test is used to make sure the strategy can help the company achieve a sustainable competitive advantage. In addition, passing the performance test indicates that a winning strategy produces strong company performance. Before IPO The primary mission and goal of Facebook CEO, Mr. Zuckerberg, before the company’s IPO, is to “connect the world digitally with Facebook” and increase its total membership (Rusli, 2014). Mr. Zuckerberg kept his primary mission of Facebook and cared less about the revenue. His strategy of Facebook at this point was to attract as many users as he would without placing more importance on how to make a lot of money. Facebook’s strategy before IPO is not a winning strategy. First of all, Facebook’s strategy at this point did not match well to the company’s best market opportunity of its initial public offering. Since Facebook wanted to go public, it needed a good performance to attract its potential investors and shareholders. The ability of gaining revenue is an important symbol and sign that potential investors will look for before deciding whether to invest. However, Mr. Zuckerberg’s primary mission of Facebook showed that “Facebook was...
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...Contents Letter of Transmittal………………………………………………………………………I Acknowledgement…………………………………………………………………...........II Abstract……………………………………………………………………………III 1. Introduction 1-4 1. Introduction ……………………………………………………………………1 1.1 Hypothesis ……………………………………………………….. ….2 1.2 Methodology: 1.2.1 Sampling Procedure……………………………………....... 2 1.2.2 Data collection………………………………………………..3 1.2.3 Data analysis………………………………………………….3 1.3 Aims and Objectives of the study...........................................................3 1.4 Significance of the study ….....................................................................3 1.5 Limitations of the study…………………………………………….......4 2. Literature Review……………………………………………….5-9 3. Introduction with related topics…………………………….10-15 3.1 A brief description of DSE…………………………………………….10 3.2 P/E ratio………………………………………………………………...10 3.2.1 Propositions…………………………………………………...11 3.2.2 A Star is born……………………………………………........11 3.2.3 Factors affecting P/E……………………………………........11 3.3 Correlation……………………………………………………………...12 3.3.1 Karl Pearson’s coefficient of correlation……………………13 ...
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...Late Closing of Position: 8 Investments Effects on Closing Positions after the 1st July 2001 8 Arbitrage Spread 9 Conclusion 11 Executive Summary The proposed merger between General Electric (GE) and Honeywell has been praised by the Companies and up until 1st of March 2001 been called “the cleanest deal you’ll ever see” by Welch, CEO of GE. On the 1st of March the antitrust regulator, The European Commission (EC), announces that they will perform a full review over the potential merger. If GE were to acquire Honeywell, they could become a dominant player in the Aerospace industry. This fact is underlying reason for EC’s review as their main objectives are to prevent market dominance, as effects of un-proportional market shares, and by that stimulate efficient competitive markets. This announcement introduce large factors of risk that needs to be considered by Gallinelli, an arbitrageur currently holding a large short position in GE and a equivalent long position in Honeywell. Ganelli’s investment success is highly dependent on the outcome of EC’s decision. Hence, Gallinelli needs to consider...
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...An analysis of the results of For the year ended 2nd April 2006 Report devised and prepared by Duncan Williamson www.duncanwil.co.uk May, June and July 2006 3rd Edition Marks and Spencer Analysis Introduction This article concerns Marks and Spencer and came about following the publication of their annual financial results. There is nothing extraordinary about the results apart from two things! • • They were very big news in the business and ordinary press They have been prepared under International Financial Reporting Standards rather than under UK Financial Reporting Standards The second point took me a little by surprise for the simple reason that it didn’t seem to cause a fuss. I expected a few more explanations by accountants and analysts over the restatement of 2005’s results and the potential impact on 2005 and 2006 and beyond of the application of IFRS. Of course, M&S published comparative figures for the IFRS based results for the latest year and they restated the previous year as they should. However, I seem to be the only person who is worried or concerned or bothered in the slightest about the potential for smoke and mirrors lying behind some or all of what was revealed. Why am I worried? Well, M&S is still trying to work its way out of a fairly tough trading period and coming at the end of the transition to IFRS I wanted to hear what analysts thought about what I was worried about. This is the second edition of this article and the final section...
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...Chapter 3 Enquiry into Stock Price Movement In this chapter we shall concentrate on daily stock price movement during April, 2010-April, 2011. The stock price is driven by various external and internal factors that can be a macroeconomic variable as well as company specific variable. Here, we shall try to figure out main driving factors, i.e corporate decisions, dse decisions. Specially, we shall try to figure out corporate decisions like Dividend declaration, Account closing, EPS, Retention, Capital structure decision, Marketing etc that are responsible for a remarkable fluctuation in stock price movement. Share Price Movement for the year of April 2010 to April 2011: [pic] Figure-17: Stock Price movement of Sonargaon Textiles for the year, April 2010 to April 2011 Comment: As we see above that stock price of Sonargaon Textiles had been rising continuously since beginning of May 2010 and it continued till beginning of December where the greater rise was during October to December. The stock prices started to move down after mid of December and it is stable at a low level now. Our motto will be to identify possible corporate decisions that have influenced investors in decision making during the fluctuation time. DSE inquiry tells us that there was no sensitive price information that was undisclosed for the price hike that we see. We can look into some corporate decision over few months. 15th July 2010 company was place in “A” category from “B” category...
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...DELUXE Corporation Teaching Note Synopsis and Objectives Suggestions for complementary cases in capital structure choice and financial flexibility: “The Wm. Wrigley, Jr. Company: Capital Structure, Valuation, and Cost of Capital,” (case 30); “Rosario Acero S.A.,” (case 32); “Gainesboro Machine Tools Corporation,” (case 25) In July 2002, an investment banker advising Deluxe Corporation must prepare recommendations for the company’s board of directors regarding the firm’s financial policy. Some special considerations are the mix of debt and equity, maintenance of financial flexibility, and the preservation of an investment-grade bond rating. Complicating the assessment are low growth and technological obsolescence in the firm’s core business. The student must recommend an appropriate financial policy for the firm and, in support of that recommendation, must show the impact on the firm’s cost of capital, financial flexibility (i.e., unused debt capacity), bond rating, and other considerations. This case may be used to pursue a number of teaching objectives: • Survey the determinants of corporate bond ratings. The case highlights the important influence of the rating agencies on the costs of debt and the access to capital markets. The case data affords students the opportunity to explore profitability, coverage ratios, and capitalization ratios as measures of credit quality. • Explore the practical challenges involved in determining the optimal...
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... Was the $78 per share bid reasonable? Why was the deal structured as all cash? Dow Chemical (“Dow”) wants to acquire Rohm and Haas (“Rohm”) for its strong operational and strategic fit. When Liveris became Chairman and CEO of Dow, he shifted the focus to growth and profitability by becoming an asset light producer of commodity chemicals and becoming a high-valued-added producer of specialty chemicals and advanced materials. This combination is a step in that direction that would bring together best-in-class products and technologies, broad geographic reach, and strong industry channels for growth opportunities. Rohm would also expand Dow’s network into emerging markets and alter Dow’s earnings profile by increasing the growth rate and reducing the cyclicality of the chemicals portfolio. The growth synergies driven by expanded product portfolios, innovative technologies, increased geographic reach, and improved market channels were expected to generate $2 - $2.6 billion in additional value. Also, after a one-time restructuring cost of $1.3 billion, Dow expects to generate at least $800 million in annual cost synergies. On a Rohm stand-alone basis, the free cash flow analysis (Exhibit 1) shows that Rohm has an implied per share price of $46.48, which is roughly in line with Rohm’s stock price one day before deal announcement of $44.83. However, when factoring the $11.78 in growth synergies and $34.84 in cost synergies, it yields an implied per share price of $93.10, which puts...
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...Captain Jack Sparrow in Pirates of the Caribbean: "True enough, this compass does not point north." "...Where does it point?" "It points to the thing you want most in this world.” “If everyone is thinking alike, then no one is thinking.” Saskatchewan as a Player in the Global Resources Market in 2014 Jean-Pierre Colin Capital Markets Strategies JPColin@Sympatico.Ca Mobile: 416-573-4300 2 Synopsis Jean-Pierre Colin draws from his 34 years of experience and wisdom as an investment banker and mining executive to outline criteria for success for mining companies. He also discusses how junior mining company executives in Saskatchewan must “think differently” because: seemingly small decisions by management can affect corporate survival in these times of crisis in the financial markets the new sources of capital that have emerged in the last decade impose important changes in corporate strategy the mining industry in Saskatchewan as a group must promote innovative initiatives to enhance it’s continued importance in the provincial economy. IF EVERYONE IS THINKING ALIKE, THEN NO ONE IS THINKING 3 Survival of an Industry Charles Darwin: “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” Is this a down cycle or a fundamental and permanent shift in capital markets? For how long? What will make it revert? Who will survive? IF EVERYONE IS THINKING ALIKE...
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...BASE CASE ASSUMPTIONS MADE • In order to discount the free cash flow to firm (FCFF), the following formula was used: o = ∗ 1 − + − − ∆ • In order to find WACC, the following assumptions were also made for the CAPM: o Market Risk Premium = FTSE CAGR 2002-2007 - fixed risk-free (given) = 4.68% o Debt costs = Interest payment / long-term debt = 5.25% • Equity ratio = market cap / total value = 128m/182m • Debt ratio = Market value debt / total = Exhibit 2 figures (not Balance Sheet) • Net debt for all different scenarios was assumed to be the value from t=0 • NWC = Current assets07 – current liabilities07 – excess cash07 (Working Capital Turnover Ratio: 58% of sales)1 was kept constant • Terminal Value = 2020 − discounted from 2019 • Pos. NPV = GBP 188.43m • As shown on the next slide, the stock at its current pricing of GBP 13.8 is undervalued according to the DCF – it should be GBP 18.27 or GBP 17.29 depending on which net debt is used o Since the Net debt/EV ratio shown in Exh. 2 does not match the EV calculated from the balance sheet figures, both results are shown at the bottom 1 As calculated in Berk & DeMarzo. (2013). “Corporate Finance” EV appx. GBP 195m http://www.transfermarkt.de/tottenham-hotspur/startseite/verein/148, calculated with FX rate. Accessed 2016-04-02 2 Official 1 BASE CASE 188.43 Current Forecast 0 2007 Revenue 1 2008 2 2009 3 2010 4 2011 5 2012 6 2013 7 2014 ...
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...Cookson Group Financial Analysis Group Members: Word count: 4978 4/30/2010 Cookson CONTENTS 2 1. Introduction ………………………………………………………………………………………………………4 2. Company Profile ………………………………………………………………………………………..……….5 3. SWOT Analysis ………………………………………………………………………………..…………………6 4. Operations Analysis ……………………………………………………………………………..…………….7 4.1 Group Overview…………………………………………………………………………………………………………………………7 4.2 Ceramics Division…………………………………………………………………………………………………………………….8 4.3 Electronics Division…………………………………………………………………………………………………………………11 4.4 Precious Metals Division…………………………………………………………………………………………………………13 5. Sector Analysis …………………………………………………………………………………………………15 5.1 General Industrial Sector ………………………………………………………………………………………………………15 5.2 Industry Conglomerates Subsector……………………………………………………………………………………….16 5.2.1 Industry Conglomerates VS Industrial Machinery and Equipment……………… ………….16 5.2.2 Firms within Industry Conglomerates …………………………………………………………………………17 5.3 Summary…………………………………………………………………………………………………………………………………18 6. Strategy ……………………………………………………………………………………………………….…19 6.1 Central Strategies ………………………………………………………………………………………………………………..19 6.2 Corporate Expansion - Acquisition…………………………………………………………………………………………22 6.3 Response to Financial Crisis…………………………………………………………………………………………………….23 6.4 Future Prospects……………………………………………………………………………………………………………………23 6.5 Comparison with Major Competitors……………………………………………………………………………………….24 7. Financial Analysis ……………………………………………………………………………………………25...
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...Running head: COURSE PROJECT 1 COURSE PROJECT 1 Jacqueline Foxwell DeVry University, Busn 379 March 19, 2011 Course Project – Part 1 Task 1: Assessing the loan options for Air Best Parts Inc. 1) Air Best Parts is currently seeking loans from National First Bank and Regions Best. National First bank is offering loans at Prime Rate + 6.75% compounded semiannually, while Regions Best is offering 13.17% compounded monthly. Both of these rates are stated rates, and in order to compare these two loan options, the stated rates or APRs must be converted to effective rates. The Prime Rate for National First is 3.25%. Below are the EARs for both banks: National First: (3.25 + 6.75 = 10%) [1 + (0.10/2)]^2 -1 = 0.1025 or 10.25% Regions Best: [1 + (0.1317/12)]^12 – 1 = 0.1399 or 13.99% 2) Based on the calculations above, it is recommended that Air Best Parts Inc. use National First Bank as opposed to Regions Best. The effective rate for National First is 10.25%, which is 3.74% lower than what is being offered by Regions Best. The effective rate is exactly what Air Best Parts will be paying back to the bank in the form of interest to the bank for borrowing money. Since this will be additional money on top of the principal, the goal is to minimize the amount of interest Air Best Parts will have to pay. Going with National First Bank will save the company money. 3) Taking a $6,950,000 loan at 8.6% APR for five years, Air Best Parts can expect their monthly...
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...Introduction Background of the study It is a common issue to test whether the stock prices are efficient, in most of the researches. It is found that long term returns are more predictable than short term and thus mean reverting. Studies mainly focus on autocorrelation of returns in different time lengths. In finance theory it says when autocorrelation of stock prices is there, then prices are predictable. Therefore, it is evidence against the random walk hypothesis of stock prices. Objective of the study The objective of this research is to test the efficiency of stock prices in Sri Lanka studying autocorrelation of short and long term returns in the CSE. Significance of the study There was a previous research on the predictability of short term returns and mean reversion in long term return in Sri Lanka in two important ways. 1. Previous studies utilized only shorter time periods because lack of long time series, since Sri Lankan stock market commenced only in 1985 and some researchers only used limited data which is the shorter time series available. Whereas the present study uses all-time series of returns available as at the research date (18.5 years from 1985-2003). 2. All previous papers tested only the short term returns except one. But this study examines short term predictability as well as long term mean reversion. It is important to use a long time series when predicting the long term returns to obtain correct results. Therefore, this...
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...Bed Bath & Beyond Case Study Feinstein and Eisenberg founded a small chain of stores called “Bed n Bath” in 1971. They operated their small chain of stores in the New York and New Jersey market where they offered bed linens and bath accessories in their stores. Feinstein and Eisenberg saw an opportunity for growth in extending their offerings beyond just bed linens and bath accessories. They quickly changed their small store format in 1985 and headed towards the superstore business model. With the change in business model came a change in the company’s name, they renamed the company “Bed Bath & Beyond” in 1987. Their stores would now carry a myriad of products with a full-line of domestic home furnishings and merchandise. The first step in making the switch to the superstore model was to expand the stores in which they currently operated. In 1987, they had 20 stores and they quickly began to plan the expansion of their stores’ square footage. The average superstore at that time was approximately 40,000 square feet. As they began to convert existing stores into superstores, they also began to find new store space to build out their superstores. The new model relied on Bed Bath & Beyond being able to provide home furnishings and merchandise at a 20% to 40% discount compared to department stores. Feinstein and Eisenberg also stressed customer service and believed it was the key to success. They spent very little on marketing or advertising which meant they relied heavily...
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