Financial Management: Auto Trader's Finance, COVID Impact, and Dividend Proposal

FINANCIAL MANAGEMENT

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
MAIN BODY..................................................................................................................................1
a) Evaluating how Auto trader has raised £200m of finance and comparing it with other
methods available........................................................................................................................1
b) Examining the mitigation impact of the COVID associated with working capital and short
term finance and medium and Long Term Finance.....................................................................2
c) Evaluating the proposal of Dave Ellis for cancelling the dividend in respect to implications
for the investors with reference to Modigliani and Miller...........................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Financial management is considered to be as one of the prominent activity which is
considered to be significant in planning, organizing, directing, controlling and effectively
monitor the key financial resources of the company (Tonkiss, 2016). It is useful in analysing the
money and investment to make appropriate set of decision. This study will highlight on
discussing ways through which Auto trader has raised £200m of finance and comparing it with
other methods available. This study also consider the mitigation impact of the COVID associated
with working capital and short term finance and medium and Long Term Finance. Furthermore,
this study also alternative views of dividend with respect to implication for investor. Auto trader
company is a public British automotive which was founded in the year 1975. This company
mainly deals in vehicle advertisement and mainly specializes in second hand and new
automotive sales.
MAIN BODY
a) Evaluating how Auto trader has raised £200m of finance and comparing it with other methods
available.
At the time of COVID- 19, consumers tend to abandon the public transport. Auto trader
company is considered to have the largest marketplace within the UK for the new as well as the
used cars. The internet car auto trader group has raised £200 million of the fresh shares to
bolster up the finances of the company. The car industry has grind to a halt and factories at a
standstill. The FTSE 100 group will sell 46 million shares which are of worth £200 million at the
current share price of 423 p which accounts for 5% of the company's equity. The company can
significantly earn money with the help of shares because it earns money from capital
appreciation. Raising funds by issuing of fresh shares to the shareholders is considered to be
significant in raising fresh capital in order to pursue new projects, pay of debts and improve the
operations of the Auto trader company in tough time of COVID-19. The UK online car
marketplace i.e., Auto trader has been selling up to 46.5 million of shares which in turn are worth
5% of the share capital. This is one of the key significant attempt which is useful in raising cash
in order to strengthen the balance sheet at the time of coronavirus crisis (Auto Trader raises
equity to tackle coronavirus crisis, 2020). However, equity raise will be allowing the Auto trader
group to resume the existing capital return policy at the earliest and gain high degree of relevant
opportunity at the time of COVID-19 pandemic. One of the key significant benefit associated
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