Finance - Barratt Developments - Financial Gearing - Case Study Assignment Help

Internal Code : 3GIG

Finance Case Study Assignment Help

Case Study : The first investment under consideration is to make further investment in their current product, which needs initial investment between £30,000,000 and £40,000,000 and has a life of ten years. The finance department appraised some other similar investments before using different investment appraisal techniques. The discount rate is 12% for the Company (Ignore inflation and taxation). At the same time, the Company plans to acquire another company in the same industry in the near future. However, the board of directors require more information for the potential target. You are tasked with the responsibility of identifying a potential target company and preparing a report to the board of directors justifying the choice of a target company and potential implications from mergers and acquisitions. As the newly appointed CFO of your chosen company, you are required to write a report to the senior management team - fully referenced, and address the following: Task : 1

1. Evaluate Financial Performance: Choose four categories from the list of five categories of financial ratios below, and use one financial ratio from each category to assess the financial health of your chosen company using past 5-year financial information:
   1. Profitability;
   2. Efficiency;
   3. Liquidity;
   4. Financial gearing;
   5. Investment.

Note: Analyse your chosen financial ratios using information from financial statements. Considering word limit, please choose one financial ratio from the four different categories listed above; therefore, you should focus on four ratios in total in your analysis. Critical analysis of the four ratios under four categories is required for a good work. Please critically evaluate past five-year firm performance using your chosen ratios and discuss the problems and limitations of financial ratios as a tool of financial analysis before make recommendation to the board of directors. Use small tables, diagrams and charts in your analysis and present professionally. Financial ratios can be collected using Osiris, Fame, annual report, or other professional resources. Compare with competitors and industry will be helpful. Task : 2

1. Investment appraisal: You plan to use NPV and IRR techniques to evaluate the project. Critically discuss NPV and IRR techniques and the implications of the investment on the Company. Risk and uncertainty in investment appraisal should be considered before you make recommendation.

Note: Please present NPV and IRR results using small tables. You need to make a decision on which investment appraisal format that you will choose. The project will be based on your chosen company, therefore, you have the flexibility to decide the project using your estimate. The investment should be around £30m to £40m, but how the money is invested would depend on the nature of the investment. Sensitivity analysis will be helpful to analyse different scenarios for the appraisal.  Task : 3

1. Potential acquisition: After you identify a potential target company, you will address the following in your report to the senior management team:
   1. Rationale for choosing the target company.
   2. The synergistic gain of the acquisition for the Company.
   3. Proposed deal value and finance of the acquisition.
   4. The potential implications of such acquisition on firm performance.
   5. Challenges and risk assessment of the acquisition.

Note: Based on analyses of your chosen company, please identify a target company in the real business world. Good work will provide critical analysis of the deal, rather than provide some general discussion without in-depth analysis. Good work will also link potential implications from the deal with your chosen financial ratios discussed in the financial performance section.