Impact of Risk on the Design of Corporate Financial Strategy - Report Writing - Finance Assignment Help

Assignment Task:

LEARNING OUTCOMES 
This assignment is designed to develop and assess the following learning outcomes: 
1. Understand the scope of decisions required to develop an integrated financial strategy that supports organizational objectives; 
2. Apply appropriate analytical techniques to evaluate trade-offs between strategic alternatives and support financial strategy recommendations; 
3. Understand how to assess the impact of risk on the design of corporate financial strategy; 
4. Demonstrate an ability to understand issues involved in how the corporation interacts with financial markets. 

ASSIGNMENT TASK 
For this assignment, you are required to do a post-audit of the decision to issue equity to fund the acquisition, and answer the question: “Did WorleyParsons’ management take the best course of action for their shareholders by undertaking the equity issue, and the way it was structured?” 
In answering this question you should address the following issues: 
1] Describe the strategic background to WorleyParsons’ situation at the time of the equity issue. What company actions and/or industry conditions prompted them to consider the possibility of an equity issue? In answering this question, you should consider what external scenarios WorleyParsons may have been anticipating in the (then) future, as well; 
2] Critically evaluate the rationale put forward by WorleyParsons’ management and their Board as to why they needed to do this issue. You should attempt to support this with any financial analysis tools you consider appropriate. In answering this question, you should consider the equity raising in the context of an overall integrated financial strategy. As part of this answer, you should prepare summary pro-forma financials to help demonstrate the impact of the equity issue. 
3] Do you consider there were other viable alternatives available, and critically evaluate these alternatives relative to WorleyParsons’ actions. In answering this you should incorporate the various criticisms raised in the media or by analysts; 
4] Describe the details of the equity issue and evaluate the structure used by WorleyParsons and its underwriters to undertake this raising. In light of the transaction outcome, where there any other alternative transaction structures they should have considered? 
5] Analyse the market reaction to the announcement, both around the immediate announcement / issue date, and in the period subsequent to this. This should involve an analysis of WorleyParsons’ share price movements. This data should be available via Capital IQ; 
6] Do you consider the equity issue achieved its strategic and financial objectives. In answering this question, you should use subsequent financial and other results? 
7] Refer to the article by Graham and Harvey entitled “How do CFO’s make Capital Budgeting and Capital Structure Decisions”, which is on the ilearn site. How does the action by WorleyParsons align with the motivations for equity issuance described in this article? 
8] Present your overall judgment on this transaction, and any recommendations you may have for an alternative course of action. In answering this question please remember you have the benefit of hindsight. 
9] What insights did you gain from your analysis of this transaction? 

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