Financial Management: Valuation Methods and Investment Appraisal Techniques

Financial Management

Contents
INTRODUCTION...........................................................................................................................................3
MAIN BODY.................................................................................................................................................3
Question 1- Merger and Takeovers.............................................................................................................3
1. Calculate the value for Trojan Plc by using various valuation method................................................3
2. Discussed the problems associated with valuation models with the help of evaluating advantages or
disadvantages...........................................................................................................................................6
Question 3 – Investment Appraisal Techniques..........................................................................................8
1. Calculate following investment appraisal technique and give brief recommendations........................8
2. Critically evaluate the Benefits or Drawbacks of different investment appraisal techniques.............13
CONCLUSION.............................................................................................................................................15
REFERENCES..............................................................................................................................................16

INTRODUCTION
Financial management relies on the debt and equity financing ratios. It is useful in terms of
commercial banking, distribution of wealth and business development, shorting and controlling
uncertainty in the currency currencies and resource processes. Financial management of an
institution plays a very important role in an entity's financial development (Aifuwa and Embele,
2019). An enterprise would also perceive financial control as a vital factor of the organization’s
operational management. Investment managers are the professionals who can really carry out
research and decide whatever kind of money to collect to fund the acquisitions of the
organization, and to also maximize the profitability of the organization to all stakeholders based
on the report. Two questions that need to be addressed in this document are about merger and
takeover, and the other is investment assessment mechanisms to reassess the most beneficial
investment strategy.
MAIN BODY
Question 1- Merger and Takeovers
1. Calculate the value for Trojan Plc by using various valuation method
Price earnings ratio: The price-earnings ratio (PE ratio) is the relationship between the
exchange value of a company and its earnings per share (EPS). It represents what the customers
are willing to pay for the earnings of an enterprise. Price earnings are important when going to
value the inventory of a business, as shareholders choose to understand whether competitive a
business is and just how successful it will be in the potential. Besides that, unless the future stock
and rate of earnings stay constant, therefore the P / E can be viewed as the period of months the
business would need to repay the amount charged for both the stock (Asghar Butt and et.al,
2018).
Formula:
Price earnings ratio= Net income/total share outstanding
= 40.4/147