Financial Market and Investment Analysis Assignment
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Added on 2020-10-22
Financial Market and Investment Analysis Assignment
Added on 2020-10-22
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FINANCIAL MARKET ANDINVESTMENT ANALYSIS
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1A. Analysing company value of Glaxo Smith Kline Plc........................................................1B. Listing the assumptions used in valuation of the company...............................................2C Justification based on valuation method.............................................................................3D Ascertaining movement of share prices of respective company for a certain period withconsidering EMH....................................................................................................................3E Analysing the unconventional monetary policy tools with consideration of various banksand financial institution of countries......................................................................................7CONCLUSION................................................................................................................................8REFERENCES................................................................................................................................9
INTRODUCTIONTo assists the investment management process inn an entity there is need to implicate theprofessional asset management techniques such as securities of the entity with the stock marketsecurities. Moreover, there can be implication of portfolio and various financial instrumentwhich will indicate the changes or variation in the finance health of the entity. In the presentresearch there will be analysis based Glaxo Smith Kline Plc which a London basedpharmaceutical industry. Report comprises with share prices of this industry as to analyse thedividend payable by them. Therefore, there will be comparison of marketable securities withBritish American Tobacco, Unilever and Altria as well as the suggestions based on improvingshare prices in efficient market hypothesis.A. Analysing company value of Glaxo Smith Kline PlcIn relation with analysing the company value there is need to consider two techniqueswhich will be helpful in ascertaining the most satisfactory outcomes. Therefore, there will be useof Dividend discount model and Free cash flow techniques which will be useful for analysingsuch data set (Valdyanathan and Krishnakumar, Noonum, 2018). However, it comprises withanalysing the dividend per share of the Glaxo Smith Kline Plc which will be helpful indetermining the adequate analysis over the data set. The implication of such techniques inanalysing company value will be accurate and efficient as to have proper determination of facts.Book value: 0.70Dividend Discount Model:Value ofsharesDividend per sharediscount rate - dividend growth rate1.600.56-1.7-1.41Free cash flows:Particulars2017EBIT1532Less: Taxes995EBIAT537Add: depreciation0Less: capital expenses2202Less: NWC10662Free cash flow-123271
In relation with analysing the company value it can be said that there is needed to havesatisfactory changes into operations which in turn will be effective as to have appropriaterevenue gains. Therefore, in accordance with the valuation of the Glaxo Smith Kline Plc whichinsists the implication of Dividend discount model. Therefore, in relation with this model therehas been consideration of dividend per share (Geddes, Schmidt and Steffen, 2018). Thus, itindicates that the firm has made payments of divided for 1.60 in 2017. Similarly, in accordancewith the discount rate which is 5.65% and the dividend growth rate is 1.698 which is 1.7.Moreover, the value of share has been analysed as -1.41. On the other side in relation withanalysing the free cash flow of the business there has bee consideration of the various gains andexpenses of the organisation which as reflected the negative cash flow of -12327.B. Listing the assumptions used in valuation of the companyThe implication of dividend discount method and free cash flow for analysing theoutcomes has reflected the most satisfactory analysis over the variables. Therefore, there hasbeen consideration of all thee relevant facts and figures which bring the reliable outcomes.However, in relation with analysing the motive behind the use of such techniques is that it bringsthe accurate results on with it will be ascertain the approximately what amount is needed to bepayable by the professionals for the dividends (Wójcik, Knight and Pažitka, 2017). It also helpsin determining the discount rate for the future payments will be made to the equity holders of theorganisation. Moreover, after considering such factors it has been calculated and accurate outcomeshas been derived from such analysis. Similarly, in relation with analysing the respected outcomesthere has been implication of various variables such as EBIT, taxes, depreciation etc. has beenconsidered in such analysis. Thus, to have the most reliable and appropriate analysis over thefacts it will be helpful to have the adequate reasoning behind it. Free cash flow helpful as itmeasures the financial performance of the company which consist of the various variables suchas operating expense of the business deducted from the capital expenditures (Altug and Kabaca,2017). Therefore, it comprises with the company's financial performance which determines theproperty, equipment and other relevant major articles that has transaction in the operating cashflows.2
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