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International Finance of Barclays Bank Essay

   

Added on  2020-07-22

15 Pages3210 Words36 Views
International Finance
International Finance of Barclays Bank Essay_1
TABLE OF CONTENTSINTRODUCTION......................................................................................................................1TASK 1......................................................................................................................................1Assessing whether Barclays should acquire FTSE 100 company or not by using ratioanalysis technique..................................................................................................................1TASK 2......................................................................................................................................6a. Advantages and disadvantages of net assets, price earnings and dividend valuationmethod....................................................................................................................................6b. Computation of intrinsic value...........................................................................................7c. Presenting the reasons due to which net assets, price earnings and dividend valuationmethod differs........................................................................................................................9d. Identifying various risk exposures which are facing by FTSE 100...................................9e. Stating the extent to which economic environment have an impact on results andvaluation...............................................................................................................................10TASK 3....................................................................................................................................10Recommendations................................................................................................................10CONCUSION..........................................................................................................................11REFERENCES.........................................................................................................................12
International Finance of Barclays Bank Essay_2
INTRODUCTIONIn the present era, business units are placing high level of emphasis on acquiring otherfirms with the motive to explore operations as well as functions. This in turn enables firm tooperate at large level and maximizes both productivity & profitability. In this context,financial tools and technique are highly significant that assists in identifying whetherproposed acquisition plan would be profitable or not. The present report is based on the casescenario of Barclays bank which is planning to acquire FTSE 100 company namely RoyalBank of Scotland. Thus, report will shed light on the extent to which financial position andperformance of Royal Bank is good. Besides this, it will provide deeper insight about howdifferent types of valuation methods such net asset, price earnings and dividend basis helps indetermining suitable value. It clearly depicts Barclays should acquire Royal bank of Scotlandor not. TASK 1Assessing whether Barclays should acquire FTSE 100 company or not by using ratio analysistechniqueRatio analysis is one of the most effectual tools which summarizes and gives quickindication pertaining to the financial perform of firm. Hence, by using this techniqueinvestors and other stakeholders can assess the extent to which profitability, liquidity andsolvency position of the company is sound (Görener, Dincer and Hacioglu, 2016). Ratio analysis of Royal Bank of Scotland for the year of 2015 and 2016 is as follows:ParticularsFormula20152016Profitability ratiosShareholders’equity53,431(Annualreport ofRBS(2016),2017)48,609Net profit -1594 -5258
International Finance of Barclays Bank Essay_3
Revenue 12,92312,590Return on equityNet profit / shareholders equity *100-2.98%-10.82%NP ratioNet profit / net sales * 100-12.3%-41.8%Solvency ratiosLong term debt 19,84719,419Shareholders’equity53,43148,609Debt-equity ratioLong term debt / shareholder'sequity0.370.40Efficiency ratio Fixed assetsturnover ratio Sales revenue / fixed assets3.313.09Assets turnoverratioSales revenue / Total assets0.010.02Investment ratios EPSNet income - preferred dividend /number of shares outstanding-0.34-1.19 DPSAnnual dividend paid / number ofshare outstanding--Profitability ratio:NP ratio: By doing ratio analysis, it has assessed that NP ratio of Royal Bank wasnegative in the year of 2015 & 2016 such as -12.3% and -41.82% respectively. Thisaspect shows that negative trend of profitability inclined over the years which is not agood indicator. Negative trend shows that such banking unit failed to generate highrevenue and exert control on indirect expenses. Along with this, after recessionarycondition banking units were not able to offer high loan to the customers which isanother main cause behind declining sales and profit in 2015 & 2016.
International Finance of Barclays Bank Essay_4

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