Q1. Best comparable companies to DSH and the strengths and weaknesses of decision. Out of the nine comparable companies given for DSH's relative valuation, five have been selected to be in the analysis for relative valuation for their similarities in business operations and risk profiles. These five companies are JB Hi-Fi Limited (JBH), Harvey Norman Holdings Ltd. (HVN), GOME Electrical Appliances Holding Limited (GMELY), Dixons Retail PLC (DXNS) and Hikari Tsushin, Inc. Strengths of decision
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WACC Example: A firm is considering a new project which would be similar in terms of risk to its existing projects. The firm needs a discount rate for evaluation purposes. The firm has enough cash on hand to provide the necessary equity financing for the project. Also, the firm: - has 1,000,000 common shares outstanding - current price $11.25 per share - next year’s dividend expected to be $1 per share - firm estimates dividends will
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products, and research development projects are worth the funding of cash through the firm's capitalization structure (debt, equity or retained earnings). Planning the eventual returns on investments in machinery, real estate and new technology are all examples of capital budgeting. Management must allocate the firm's limited resources between competing opportunities (projects), which is one of the main focuses of capital budgeting. Capital budgeting is also concerned with the setting of criteria about
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MERCURY ATHLETIC FOOTWEAR Problem statement: West Coast Fashions, Inc a large business of men’s and women’s apparel decided to dispose of one of their segments; Mercury Athletic. John Liedtke, head of the business development for Active Gear, Inc saw it has a possible opportunity for them to acquire it. The footwear industry is very competitive, with low growth and stable profit margins. AGI is very profitable but it is smaller than its competitors, which is becoming a disadvantage. Therefore
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WACC Example: A firm is considering a new project which would be similar in terms of risk to its existing projects. The firm needs a discount rate for evaluation purposes. The firm has enough cash on hand to provide the necessary equity financing for the project. Also, the firm: - has 1,000,000 common shares outstanding - current price $11.25 per share - next year’s dividend expected to be $1 per share - firm estimates dividends will
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Applied Finance Centre Assignment Cover Sheet Unit Code: Lecturer’s Name Assignment Title: Student’s Name: Student Number: Due Date: ECFS895 Unit Name: Private Equity Study Centre: AFC Stephane Chatonsky Private Equity Case Study Manuel Hernandez 43009492 4 September, 2012 th Date Submitted: 4 , September, 2012 th ACADEMIC HONESTY DECLARATION (this is very important please read carefully): By placing my name in this document I declare that: This
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Apple Inc. 1 Apple Inc. 2 Apple Inc. Executive Summary This report provides an in-depth analysis of Apple Inc. (AAPL), with necessary recommendation increasing the wealth of the company and their shareholders. The primary competitors of AAPL would include companies such as the Intel Corporation, Target Inc. and any company that sell technological products. The total revenue for the most recent fiscal year was $182,795 billion dollars on their assets and $39,510 of net income. Timothy
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option and the appropriate discount rate for discounting the incremental cash flows. Different evaluation criteria are used to rank the projects like internal rate of return (IRR), net present value (NPV), with the weighted average cost of capital (WACC) used as the discount factor, and the use of profitability index for comparison. The average return on the investment (ROI) and payback period that are usually used by Phuket Beach Hotel when evaluating capital projects are also considered. Despite
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the view of the customer. The competition in the industry is fueled by limited shelf space in retail stores. So, all of the food manufacturing companies must compete with each other to ‘get into’ stores and stay there. In the soft-drink market, for example, this often leads to self-cannibalization of shelf space by the creation of new products. It is better for Coke space to be replaced by Vanilla Coke than for it to be replaced by Pepsi. Threat of buyer power: Medium (5). The buyer power is a product
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congruence throughout an organization. 13-4 An investment center is a responsibility-accounting center, the manager of which is held accountable not only for the investment center's profit but also for the capital invested to earn that profit. Examples of investment centers include a division of a manufacturing company, a large geographical territory of a hotel chain, and a geographical territory consisting of several stores in a retail company. 13-5 [pic] 13-6 A division's ROI can be
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