logo

Introduction to Accounting and Finance Assignment

   

Added on  2020-03-16

14 Pages3186 Words99 Views
Finance
 | 
 | 
 | 
Introduction to Accounting and FinanceAssessment 2 Part B (Financial Management Analysis)MYER Holdings Limited (MYR)
Introduction to Accounting and Finance Assignment_1

Executive Summary:In this report we are analysing the financial statement of Myar holding Limited on the basisof various parameters. The report presenting opinion on whether financial position of thecompany is sound or not. It also represents stability of the company in terms of financials. Italso present analysis of capital structure of the company.Page 2 of 14
Introduction to Accounting and Finance Assignment_2

TABLE OF CONTENTS(I)DEBT VALUATION of MYER-3a)Short Term and Long term debts3b)Consistency with Industry3c)Influence of industry on debt structure3d)Cost of debt3(II)SHARE VALUATION of MYER - a)Cost of equity4b)Evaluation of revenue, EPS, dividends and growth expectations5c)Valuation of Company’s stock6i.Comparables Approach (P/E)ii.Constant Growth rate modeld)Comparison of above models price with market price7e)Additional data for valuation of stock7(III)COST OF CAPITAL of MYER – a)Weighted average cost of capital (WACC) 7b)Tax rate8c)Difference between cost of debt and equity8d)Current Liabilities inclusion in cost of capital calculation9e)Value of WACC Calculation9f)Current projects undertaken by using WACC in decision making9g)Capital structure9h)Optimal Capital Structure9(IV)MARKET ANALYSIS of MYER –a)Financial Performance10b)View of Financial Analysts10c)Other item different in MYER11Page 3 of 14
Introduction to Accounting and Finance Assignment_3

DEBT VALUATION of MYER-a)Short Term and Long term debts - The debts of the Company as at 30th July, 2016 consist of a revolving cash advancesyndicated facility of $600 million. As at 30th July, 2016 and 25th July, 2015 the company owed the following amountsof short-term and long-term debts:-Nature of debt20162015$'000$'000Total Debt (Long term)147,273 441,179 Less: Cash Equivalents (deducted to know net debt)(45,207)(53,323)Net Debt102,066 387,856 b)Consistency with IndustryConsistent with others in the industry, the company structures capital on the basis ofvarious balance sheet ratios including the gearing ratio. This ratio is calculated as netdebt divided by total capital. Net debt is calculated as total borrowings less cash andcash equivalents. Total capital is equity plus net debt. Thus, the debt structure isconsistent with the industry as the company regularly takes steps to ensure that thecapital gearing ratio is kept lower and consistent with its peers in the industry.c)Influence of industry on debt structureMYER group continues to put in best efforts in managing its capital structureefficiently and to make it consistent with the industry. This is done throughmonitoring the Capital gearing ratio of the company and continuously comparing itwith the peers in the industry.To stand in the market and to compete with the competitors in the market, thegearing ratio of the company has decreased during 2016 primarily driven by adecrease in net debt and an increase in equity.d)Cost of debtCost of debt refers to the interest rate paid by a company on its debt obligations. It is calculated as follows:-Page 4 of 14
Introduction to Accounting and Finance Assignment_4

End of preview

Want to access all the pages? Upload your documents or become a member.

Related Documents
Assignment on Financial Management1
|11
|1661
|14

Financial Analysis and Valuation of Tesco plc
|12
|2746
|2

Financial Analysis and Company Valuation of BAE Systems
|13
|3119
|57

Payout Ratio = Dividend Per Share / EPS (Basic) CapitaLand FY 2013
|5
|591
|147

Financial Analysis
|8
|1085
|454

Do you need an MBA in Corporate Finance?
|11
|845
|15