Posted: September 13th, 2017

A financial analyst's (for a firm of international management consultation) report to a client

Paper, Order, or Assignment Requirements

the question is as follows, please read it and answer all its sections
you work as a financial analyst for a firm of international management consultants. A very large multinational company (of your choice) has approached the firm for advice as they are considering diversification through a strategy of acquisition. you are required to write a report to the client which:
1. identifies two potential acquisition targets and gives a brief rationale for their potential acquisition.
2. describes the importance of working capital and capital structure management and critically analyses both potential targets with regard to their current working capital and capital structure management. your analysis should take into account the type of industry in which the potential targets are engaged.
3. compares the financial performance, risk exposures and future prospects of the potential acquisition targets.
4. concludes with a reasoned argument as to which company might be the preferred acquisition target.
some instructions for writing this essay need to be taking into account when writing this essay. they are as follows:
1. the consultant’s report should be clearly and logically structured whatever format appears to be most suitable for supporting the analysis, arguments, conclusions and recommendations. locate ratio calculations in an appendix and only present the actual ratios in the body of the report.
2. tables, graphs and charts are a convenient way of organising your findings and presenting data. they also make it easier for the client (and the marker) to understand your findings and so you are recommended to use visual aids where appropriate.
3. table of content with page numbers should be included in this essay.
4. the submission of the work should be organised and clearly structured.
5. maximum word length is 4000 with maximum 80 words per paragraph.
6. indicate any source of information and literature review by including all the necessary citations and references adopting the Harvard citation with page numbers and years.

the instructor of the module gave us some thoughts to focus on and include in the essay, please read them and include them in the essay:
a. choose 2 targets in the same trade
b. choose listed companies, for the information availability on them.
1. what are the targets and whats is the rational (by trade, geography):
a. is diversification a good idea?
b. what are good reasons for choosing targets?
2. importance of working capital:
a. how much to invest
b. how much it should be financed (aim to minimise cost).
c. importance of capital structure management to achieve the minimum cost of capital.
3. analysis of WC (Working Capital) management, for each target: calculate WC ratio for two years:
a. compare year to year
b. compare between the targets

4. analysis of capital structure, calculate for each target:
a. financial gearing
b. interest cover
c. compare
d. consider other industry data

5. financial performance, cover
a. profitability/ return
b. liquidity WC
c. efficiency WC
d. gearing: capital structure
e. investment ratio

-compare and analyse the following:
a. risk exposure
total risk= buisness risk+financial risk
-future prospects
use your previous ratio analysis , try to find out non financial info as well (good indicator) e.g.: reputation for quality.
key ratio is PE ratio.