Business Valuation and Financial Analysis for Tassal Group Limited
Added on 2023-06-11
27 Pages7432 Words424 Views
Running Head: Business Valuation and Financial Analysis 1
Project Report: Business valuation and analysis
Project Report: Business valuation and analysis
Business Valuation and Financial Analysis 2
Contents
Introduction ...................................................................................................................... 3
Forecasting ....................................................................................................................... 3
Sales growth: ................................................................................................................ 4
Asset turnover ratio: ..................................................................................................... 6
Profit Margin: ............................................................................................................... 7
Net dividend payout ratio: ............................................................................................ 8
Cost of debt: ................................................................................................................. 9
Cost of equity: ............................................................................................................ 10
Valuation ........................................................................................................................ 11
Dividend discount model:........................................................................................... 12
Residual income model: ............................................................................................. 13
Residual operating income model: ............................................................................. 15
Free cash flow: ........................................................................................................... 16
Sensitivity analysis ......................................................................................................... 19
Management consulting advice ...................................................................................... 20
Potential opportunities:............................................................................................... 21
Challenges: ................................................................................................................. 21
Remedies: ................................................................................................................... 21
Conclusion ...................................................................................................................... 22
References ...................................................................................................................... 23
Appendix ........................................................................................................................ 26
Contents
Introduction ...................................................................................................................... 3
Forecasting ....................................................................................................................... 3
Sales growth: ................................................................................................................ 4
Asset turnover ratio: ..................................................................................................... 6
Profit Margin: ............................................................................................................... 7
Net dividend payout ratio: ............................................................................................ 8
Cost of debt: ................................................................................................................. 9
Cost of equity: ............................................................................................................ 10
Valuation ........................................................................................................................ 11
Dividend discount model:........................................................................................... 12
Residual income model: ............................................................................................. 13
Residual operating income model: ............................................................................. 15
Free cash flow: ........................................................................................................... 16
Sensitivity analysis ......................................................................................................... 19
Management consulting advice ...................................................................................... 20
Potential opportunities:............................................................................................... 21
Challenges: ................................................................................................................. 21
Remedies: ................................................................................................................... 21
Conclusion ...................................................................................................................... 22
References ...................................................................................................................... 23
Appendix ........................................................................................................................ 26
Business Valuation and Financial Analysis 3
Introduction:
Evaluating the worth of an organization is one of the crucial parts of a business. It is a
systematic procedure which is conducted by the professionals and the financial officer of the
company to evaluate the exact worth and the capitalization of the business. It evaluates the
financial items and the value of the company to generate an idea about the overall price and
worth of the company. This process is used when an organization is trying to buy a company
or sell their company. This process is also useful to measure the investment position of the
company (Ward, 2012). investors who are looking for long term investment, takes the help
of business valuation method to analyze that whether the firm would offer great returns to the
investors or not.
Tassal group limited is an Australian company which is operating its business through
various subsidiary companies. The company mainly engages in the farming, hatching, selling,
processing and marketing Atlantic salmon in Australian market. The main product of the
company, Atlantic salmon, is sold by the company in various categories such as canned,
smoked, fresh and frozen. The name of the brands of the company is Tassal superior gold, De
Costi Seafood, Tasmanian smokehouse etc through its wholesale and retail channels.
Forecasting:
Forecasting is a process which projects the future performance and place of the
business on the basis of the historical data of the business (Weston and Brigham, 2015). the
forecasting process measures the changes into the final financial statement of the company in
last few years and on the basis of that, it is measured that what changes would take place in
the company in upcoming years. In the report, the forecasting has been done on the basis of
the annual report and final financial statement of the company to measure that what are the
upcoming changes into the financial items in the upcoming years.
The forecasting process has mainly be done on the sales growth (SG), profit margin
(PM), asset turnover ratio (ATO), cost of equity (Ke), dividend payout, cost of debt etc. the
forecasting of these item have been done on the basis of the last 5 years financial
performance and position of Tassal Group. The focus has been done on each activity as every
activity mainly affects on the total worth of the company. In case of Tassal group plc, it has
been measured that the performance and the position of the business is continuously
enhancing. The stock price of the company has also been enhanced from $ 1.94 to $ 4.10
from 30 June 2013 to 2nd June 2018 (Yahoo Finance, 2018). The changes into the financial
Introduction:
Evaluating the worth of an organization is one of the crucial parts of a business. It is a
systematic procedure which is conducted by the professionals and the financial officer of the
company to evaluate the exact worth and the capitalization of the business. It evaluates the
financial items and the value of the company to generate an idea about the overall price and
worth of the company. This process is used when an organization is trying to buy a company
or sell their company. This process is also useful to measure the investment position of the
company (Ward, 2012). investors who are looking for long term investment, takes the help
of business valuation method to analyze that whether the firm would offer great returns to the
investors or not.
Tassal group limited is an Australian company which is operating its business through
various subsidiary companies. The company mainly engages in the farming, hatching, selling,
processing and marketing Atlantic salmon in Australian market. The main product of the
company, Atlantic salmon, is sold by the company in various categories such as canned,
smoked, fresh and frozen. The name of the brands of the company is Tassal superior gold, De
Costi Seafood, Tasmanian smokehouse etc through its wholesale and retail channels.
Forecasting:
Forecasting is a process which projects the future performance and place of the
business on the basis of the historical data of the business (Weston and Brigham, 2015). the
forecasting process measures the changes into the final financial statement of the company in
last few years and on the basis of that, it is measured that what changes would take place in
the company in upcoming years. In the report, the forecasting has been done on the basis of
the annual report and final financial statement of the company to measure that what are the
upcoming changes into the financial items in the upcoming years.
The forecasting process has mainly be done on the sales growth (SG), profit margin
(PM), asset turnover ratio (ATO), cost of equity (Ke), dividend payout, cost of debt etc. the
forecasting of these item have been done on the basis of the last 5 years financial
performance and position of Tassal Group. The focus has been done on each activity as every
activity mainly affects on the total worth of the company. In case of Tassal group plc, it has
been measured that the performance and the position of the business is continuously
enhancing. The stock price of the company has also been enhanced from $ 1.94 to $ 4.10
from 30 June 2013 to 2nd June 2018 (Yahoo Finance, 2018). The changes into the financial
Business Valuation and Financial Analysis 4
strategies and plans are the main reasons behind this increment. Few reasons behind the
forecasting have been explained in the appendix.
Sales growth:
Sales growth is a key term which is used by the professionals to measure the increment
in the sales amount of the company in next year. Tassal group limited’s sales growth has been
calculated on the basis of the last 5 years sales amount of the company and it has been
measured that the sales growth of the company is quite competitive. The sales amount of the
company has been enhanced by 4.75% in 2017 and the current trends explain that in future
the sales growth of the company would be improved. The better economical position, lower
interest rate, higher demand in market is few reasons behind robust sales of the company
(Madhura, 2014).
The Bloomberg (2018) report explains that the industry is the major player behind the
better sales amount of the business. The average sales growth of the organization in last 5
years is 14.79% which explains that the sales of the company have became more competitive
in last 5 years. The by product revenue of the company is lower. The main focus of the
company is on the main products of the company which is rising continuously.
Annual report (2017) of the company explains that the domestic market demand and
international market demand has been increased in last few years due to which the total
revenue of the company has also been improved. The total sales volume of the company has
been lowered in 2017 but the higher sales rate has improved the overall sales of the company.
The company has improved the marketing cost to enhance the sales amount of the company
which explained about positive relation among the marketing cost and total sales amount of
the company.
strategies and plans are the main reasons behind this increment. Few reasons behind the
forecasting have been explained in the appendix.
Sales growth:
Sales growth is a key term which is used by the professionals to measure the increment
in the sales amount of the company in next year. Tassal group limited’s sales growth has been
calculated on the basis of the last 5 years sales amount of the company and it has been
measured that the sales growth of the company is quite competitive. The sales amount of the
company has been enhanced by 4.75% in 2017 and the current trends explain that in future
the sales growth of the company would be improved. The better economical position, lower
interest rate, higher demand in market is few reasons behind robust sales of the company
(Madhura, 2014).
The Bloomberg (2018) report explains that the industry is the major player behind the
better sales amount of the business. The average sales growth of the organization in last 5
years is 14.79% which explains that the sales of the company have became more competitive
in last 5 years. The by product revenue of the company is lower. The main focus of the
company is on the main products of the company which is rising continuously.
Annual report (2017) of the company explains that the domestic market demand and
international market demand has been increased in last few years due to which the total
revenue of the company has also been improved. The total sales volume of the company has
been lowered in 2017 but the higher sales rate has improved the overall sales of the company.
The company has improved the marketing cost to enhance the sales amount of the company
which explained about positive relation among the marketing cost and total sales amount of
the company.
Business Valuation and Financial Analysis 5
Figure 1: sales growth rate
The figure 1 of sales growth rate briefs that the sales growth of the business would be
enhanced in subsequently 5 years by an incremental rate. However, it has been estimated that
the growth rate of the business would be lower in 2021 by 0.25% due to the changes into the
economical performance and the marketing graph of the company (Weaver, Weston and
Weaver, 2001). However, the continuous growth in the policies and the strategies of the
company are better base for the company to enjoy the sales growth.
Figure 2: Sales forecast
The figure 2 explains that the sales of the company would increase by a great level and
it would improve the future financial performance of the company.
Figure 1: sales growth rate
The figure 1 of sales growth rate briefs that the sales growth of the business would be
enhanced in subsequently 5 years by an incremental rate. However, it has been estimated that
the growth rate of the business would be lower in 2021 by 0.25% due to the changes into the
economical performance and the marketing graph of the company (Weaver, Weston and
Weaver, 2001). However, the continuous growth in the policies and the strategies of the
company are better base for the company to enjoy the sales growth.
Figure 2: Sales forecast
The figure 2 explains that the sales of the company would increase by a great level and
it would improve the future financial performance of the company.
Business Valuation and Financial Analysis 6
Asset turnover ratio:
Asset turnover is a key term which is used by the experts to measure the changes into
the overall resources of the business on the basis of the total sales. Tassal group limited’s
asset turnover ratio has been calculated on the basis of the forecasted sales and the increment
rate in the total assets of the company. The evaluation on asset turnover ratio of the company
explains that the average assets turnover of the company would be improved from the last
year performance of the company in next 5 years. The asset turnover ratio of the company
has been enhanced by 0.44 in 2017 and the current trends explain that in future the asset
turnover ratio of the company would be improved more. The stable position, better financial
policies etc are few reasons behind robust asset turnover ratio of the company.
The annual report (2017) explains that the company has tried to maintain a better long
term and short term financial obligation which has helped the company to maintain an asset
turnover of 0.70. The average asset turnover ratio of the company is 0.70 in last 5 years and
thus, it has been estimated that the performance and the overall resources of the company
would be improved by 0.70 in context with the sales of the company (Kruth, 2013). The asset
turnover of the company explains that the ATO of the company was lower in 2017 but the
continuous improvement of the business would enhance the overall performance of the
company.
Annual report (2017) of the business explains that the few new alterations have been
done by the financial managers and the chief financial officer of the company to manage the
better relationship among the available resources and the sales of the company.
Asset turnover ratio:
Asset turnover is a key term which is used by the experts to measure the changes into
the overall resources of the business on the basis of the total sales. Tassal group limited’s
asset turnover ratio has been calculated on the basis of the forecasted sales and the increment
rate in the total assets of the company. The evaluation on asset turnover ratio of the company
explains that the average assets turnover of the company would be improved from the last
year performance of the company in next 5 years. The asset turnover ratio of the company
has been enhanced by 0.44 in 2017 and the current trends explain that in future the asset
turnover ratio of the company would be improved more. The stable position, better financial
policies etc are few reasons behind robust asset turnover ratio of the company.
The annual report (2017) explains that the company has tried to maintain a better long
term and short term financial obligation which has helped the company to maintain an asset
turnover of 0.70. The average asset turnover ratio of the company is 0.70 in last 5 years and
thus, it has been estimated that the performance and the overall resources of the company
would be improved by 0.70 in context with the sales of the company (Kruth, 2013). The asset
turnover of the company explains that the ATO of the company was lower in 2017 but the
continuous improvement of the business would enhance the overall performance of the
company.
Annual report (2017) of the business explains that the few new alterations have been
done by the financial managers and the chief financial officer of the company to manage the
better relationship among the available resources and the sales of the company.
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