Comparative Financial Analysis of Axiata Group Berhad and Digi.Com

This report presents a detailed financial analysis of Axiata Group Berhad and Digi.Com Berhad, two prominent telecommunication companies in Malaysia. The analysis begins with an introduction to the companies, followed by a comparison of their financial performance using ratio analysis across profitability, liquidity, efficiency, capital structure, and investor ratios. The report employs graphs and charts to visually represent the data, highlighting key trends and differences between the two companies over a five-year period. Strategic and operational issues are identified for each company, drawing conclusions based on the financial data. The analysis reveals that Digi generally outperforms Axiata in terms of profitability and efficiency, while Axiata demonstrates a stronger capital structure. The report also discusses the implications of these findings for investors and stakeholders. This report is a comprehensive comparative study of the financial health and strategic challenges faced by Axiata and Digi, providing valuable insights into the telecommunications industry in Malaysia.

Running head: FINANCIAL ANALYSIS AND MANAGEMENT
Financial Analysis and Management
Name of the Student
Name of the University
Author’s Note

1FINANCIAL ANALYSIS AND MANAGEMENT
Table of Contents
Part 1..........................................................................................................................................2
Introduction............................................................................................................................2
Introduction on the Companies..............................................................................................2
Comparison and Analysis of the Financial Performance.......................................................3
Identification of Strategic and Operational Issues...............................................................13
Conclusion............................................................................................................................16
Part 2........................................................................................................................................17
Introduction..........................................................................................................................17
Five Difference Sources of External Finance......................................................................17
Weighted Average Cost of Capital......................................................................................19
Conclusion............................................................................................................................20
References................................................................................................................................22

2FINANCIAL ANALYSIS AND MANAGEMENT
Part 1
Introduction
Determination of the overall financial health of a company demands assessing and
evaluating both financial performance and position of the same company with the use of
different financial analysis techniques. This helps the investors, creditors and other
stakeholders to know the trend of financial performance of the companies. In this regard,
analysis of ratios is considered as a major technique for assessing and comparing the financial
performance of more than one companies (Fatihudin 2018). In addition, the use of graphs and
charts largely helps in the analysis. This report intends at analysing as well as evaluating the
financial performance and financial position of two companies operating in the
telecommunication industry of Malaysia. These two companies are Axiata Group Berhad
(Axiata) and Digi.Com Berhad (Digi) that is the competitor company; and both of these
companies are listed in Bursa Malaysia. This report also discusses about the strategic and
operational issues in these two companies.
Introduction on the Companies
Axiata is considered a major telecommunication companies in Asia. The
transformation of this companies can be seen from a holding business entity with a portfolio
of pure-play mobile assets into a Triple Core Strategy-driven business organization with a
focus on Digital Telco, Digital Businesses and communication infrastructure. The main
products of the company include mobile network operation, network infrustrurure and digital
internet (axiata.com 2019). Digi is a major Malaysian company involves in providing mobile
connectivity and internet services on its advanced G+ network. Digi is famous for providing
its customers with relevant, personalized and engaging digital products and services with the
aim to enhance their digital lifestyle. The key product line of the business include mobile

3FINANCIAL ANALYSIS AND MANAGEMENT
services, telecommunication services and cable television (ocs.digi.com.my 2019). Both
Axiata and Digi operate in the telecommunication industry of Malaysia. In case of the market
share, Digi has the maximum share in the Malaysian telecommunication industry where
Axiata has less market share as compared to Digi (statista.com 2019). As per the chairman’s
statement of Axiata, the company had to face many business risks due to the presence of
volatile macroeconomic condition, market as well as technological disruption, shift in
demand and key regulatory uncertainties across the region (axiata.listedcompany.com 2019).
On the other hand, Digi has been able in providing a solid financial performance that
provided the shareholders with healthy returns. This has provided the company with major
confidence (digi.listedcompany.com 2019). In the presence of this reasons, Digi can be
considered as a major competitor of Axiata in case it want to become the market leader.
Comparison and Analysis of the Financial Performance
Ratio analysis is considered as a major tool to analyse and assess the financial
performance and financial position of the companies; and the same is also applicable in case
of Axiata and Digi. The following table shows the results of ratio analysis in five major
categories.
Table 1: Results of Ratio Analysis

4FINANCIAL ANALYSIS AND MANAGEMENT
It can be seen from the above table that both the companies have performed
differently under the ratios. The following discussion shows the use of graphs with the aim to
compare the financial performance and position of these two selected companies.
Profitability Ratios
Axiata Digi
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
45.00%
50.00%
34.89%
45.93%
37.82%
45.52%
37.16%
44.79%
36.63%
43.14%
37.40%
45.06%
Operating Profit Ratio
2018 2017 2016 2015 2014
Figure 1: Operating Profit Ratio
(Source: As created by Author)
Operating profit ratio can be considered as the return that a company achieves from
standard operations. This assesses how much profit a company makes after the payment of
variable costs like raw material, wages and others (Innocent, Mary and Matthew 2013).
Operating profit ration of Axiata is less for the last five years as compared to the same ratio
of Digi for the same period. Moreover, this ratio of Axiata has decreased in the current year
where this has increased in Digi. This leads the implication that there have been certain
operational flaws in Axiata along with inefficient management of organizational resources.
Since both the companies have same operational characteristics, this is a key negative aspect
of the profitability performance of Axiata.

5FINANCIAL ANALYSIS AND MANAGEMENT
Axiata Digi
-30.00%
-20.00%
-10.00%
0.00%
10.00%
20.00%
30.00%
40.00%
-21.97%
23.04%
4.76%
23.30%
3.05%
24.75%
13.26%
24.92%
12.66%
28.94%
Net Profit Ratio
2018 2017 2016 2015 2014
Figure 2: Net Profit Ratio
(Source: As created by Author)
The use of net profit ratio is seen for determining the overall efficiency of the
operationa of a company since this is an indicator of how well a firm’s trading activities are
performing. Axiata has registered net loss in the present year where Digi has registered
healthy net profit in the same period. In addition, Digi has better net profit ratio over the last
five years as compared to Axiata. It implies that Digi has performed better in term of
profitability than Axiata (Lartey, Antwi and Boadi 2013). Net loss indicates that Axiata may
have unnecessary direct and indirect cost that has contributed to net loss. This needs to be
considered as a major negative aspect of the financial performance of Axiata as compared to
Digi.

6FINANCIAL ANALYSIS AND MANAGEMENT
Liquidity Ratios
Axiata Digi
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
0.67
0.78
0.65
0.83
0.52
0.760.79
0.38
0.79
0.46
Current Ratio
2018 2017 2016 2015 2014
Figure 3: Current Ratio
(Source: As created by Author)
Current ratio is used by the business organizations for testing their ability of
discharging the short-term liabilities. Both Axiata and Digi has current ratio less than 1:1 that
shows the lack of current assets in these companies for fulfilling the present business
obligation. However, the current ratio of Digi in 2017 and 2018 is more than the same of
Axiata in 2017 and 2018. The above graph shows that both the companies have registered
major fluctuation in the current ratio and this indicates towards the presence of inconsistency
in the ability of these companies to discharge the present business obligation. On the overall
basis, Digi has better liquidity position as per the current ration than Axiata (Setyawati and
Amelia 2018).

7FINANCIAL ANALYSIS AND MANAGEMENT
Axiata Digi
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
0.66
0.75
0.64
0.80
0.51
0.74
0.78
0.35
0.78
0.44
Quick Ratio
2018 2017 2016 2015 2014
Figure 4: Quick Ratio
(Source: As created by Author)
Quick ratio is a crucial liquidity ratio that the business organizations use for
measuring their efficiency to meet the current business obligations with quick assets. Quick
assets are those that can be easily converted in cash in short duration. The above graph shows
that both Axiata and Digi has quick ratios less than 1 which is not a desirable liquidity
position for the companies. It implies that these companies do not have adequate assets that
can be easily converted in cash for fulfilling the current business obligations. However, it can
be seen that the liquidity position of Axiata has improved in the present year while the same
has deteriorated in the same year (Babalola and Abiola 2013).

8FINANCIAL ANALYSIS AND MANAGEMENT
Efficiency Ratios
Axiata Digi
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
0.36
1.07
0.35
1.12
0.34
1.30
0.38
1.54
0.38
1.63
Asset Turnover Ratio
2018 2017 2016 2015 2014
Figure 5: Asset Turnover Ratio
(Source: As created by Author)
Asset turnover ratio is an efficiency ratio that measures how well a company is
utilizing its assets for generating sales. This assesses a company’s efficiency to use assets for
the generation of assets. The asset turnover ratio of Digi is better than the same of Axiata
over the last five years. High asset turnover ratio indicates towards the high efficiency of Digi
in using its assets as compared to Axiata. Both Axiata and Digi operates in the same industry
and therefore, superior efficiency of Digi in using its assets for generating sales leads to
increased sales in the company as compared to Axiata (Santosuosso 2014).

9FINANCIAL ANALYSIS AND MANAGEMENT
Axiata Digi
0.00
2.00
4.00
6.00
8.00
10.00
12.00
4.97 4.81
5.26
4.34
4.94 5.02
5.67
8.35
6.11
9.57
Accounts Receivable Turnover Ratio
2018 2017 2016 2015 2014
Figure 6: Accounts Receivable Turnover Ratio
(Source: As created by Author)
Accounts receivable turnover ratio is a major efficiency ratio that undertakes the
measurement of a company’s efficiency in the collection of revenue from the trade and other
receivable. Accounts receivable turnover ratio of both these two companies are almost same.
This ratio has decreased in 2018 for Axiata, but increased for Digi. It can be seen from the
above figure that Axiata has maintained this ratio between 6 to 5 times in a year, but there are
some large fall in this ratio for Digi from 2015 to 2017. This is an indicator that there might
be certain flaws in the credit policy of Digi (Santosuosso 2014). However, on the overall
basis, Axiata has better efficiency in the present years in collecting the dues from its trade
receivables.

10FINANCIAL ANALYSIS AND MANAGEMENT
Capital Structure Ratios
Axiata Digi
0.00
2.00
4.00
6.00
8.00
10.00
12.00
2.33
8.22
1.59
10.24
1.79
9.59
1.29
7.98
1.28
5.27
Debt to Equity Ratio
2018 2017 2016 2015 2014
Figure 7: Debt-to-Equity Ratio
(Source: As created by Author)
Debt to equity ratio is considered as the risk ratio that involves in the calculation of
the weight of total liabilities against the total shareholder’s equity. The debt to equity ratio of
Axiata over the last five years is majorly less than that of Digi for the same period; and this
needs to be considered as a positive aspect for Axiata. This indicates towards the less
dependency of Axiata on long-term debts as compared to shareholder’s equity where Digi is
highly reliable on debt financing which makes it highly leveraged and risky. High
dependency of the company on debt financing increases the interest expenses which leads to
the reduction in profitability. However, Axiata has debt-to-equity ratio more than 1 and it also
shows the presence of large amount of debts in the company’s capital structure (Rajendran
and Achchuthan 2013).

11FINANCIAL ANALYSIS AND MANAGEMENT
Axiata Digi
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
0.64
0.89
0.56
0.91
0.60
0.91
0.54
0.89
0.54
0.84
Debt Ratio
2018 2017 2016 2015 2014
Figure 8: Debt Ratio
(Source: As created by Author)
Debt ratio is a major capital structure ratio that assesses the level of a company’s
leverage. This can be interpreted as the percentage of a firm’s asset that are financed by debt
(Kiran 2013). Since the debt ratio of Digi is higher than the same of Axiata, this indicates the
presence of greater debt in the capital structure of Digi. It need to be mentioned that the
proportion of debt in Axiata is more than the proportion of assets, but Axiata has less debts
when compared to the extent of leverage of Digi. Therefore, Axiata is less leveraged as
compared to Digi.

12FINANCIAL ANALYSIS AND MANAGEMENT
Investors Ratios
Axiata Digi
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
10.1
19.8
5.7
19.0
29.5
21.0
27.4
22.2
29.9
26.1
Earnings per Share
2018 2017 2016 2015 2014
Figure 9: Earnings per Share
(Source: As created by Author)
EPS is considered as a major indicator of a company’s profitability. This ratio is used
with the aim to assess a firm’s ability of producing net profits for the common shareholders
(Adediran and Alade 2013). The EPS of both Axiata and Digi has an increasing trend, but
Digi has higher EPS in the current years of 2017 and 2018 as compared to Axiata. This
indicates that Digi has been more profitable in the recent years and has distributed more
profits to the shareholders. This also indicates towards the greater profitability in Digi which
has helped the company in distributing more profits to its common shareholders. However,
one positive aspect for Axiata is the large increase in EPS in the current year which shows
increased profitability of the firm.

13FINANCIAL ANALYSIS AND MANAGEMENT
Axiata Digi
0%
20%
40%
60%
80%
100%
120%
85.00%
101.71%
64.00%
100.02%
50.00%
99.98%
85.00%
109.65%
84.00%
98.77%
Dividend Payout Ratio
2018 2017 2016 2015 2014
Figure 10: Dividend Payout Ratio
(Source: As created by Author)
The dividend pay-out ratio assesses the total amount of dividend paid out to the
shareholders in relation to the company’s net income. The dividend pay-out ratio of Digi is
higher in the last three years and the same can be seen in case of Axiata. However, the
dividedn pay-out ratio of Digi is more than that of Axiata and this implies that Digi has
distributed more percentage of net income to the shareholders in the form of dividend.
However, one positive is that Axiata has been able in increasing its dividedn pay-out ratio in
2018 as compared to the last two years. These also shows better financial performance of
Digi as compared to Axiata (Zeitun and Tian 2014).
Identification of Strategic and Operational Issues
It can be seen from the above ratio analysis that Axiata and Digi has certain strategic
as well as operational issues in its financial performance. They are discussed below:
 Axiata has lower operating profit ratio which is the proof of operational flaws and
ineffective management of resources by the company. Lowe net profit ratio shows

14FINANCIAL ANALYSIS AND MANAGEMENT
that there is lack of effective financial strategies in Axiata to reduce the business
expenses for increasing the net profit (Lartey, Antwi and Boadi 2013).
 Both Axiata and Digi have current and quick ratios less than 1:1 which indicates
towards both strategic and operational efficiency of these companies in maintaining
the required level of working capital in day to day business (Babalola and Abiola
2013).
 Axiata has lower asset turnover ratio which shows the lack of operational efficiency
of the company in using its assets for generating sales. In addition, decrease in
accounts receivable turnover ratio indicates towards the presence of ineffective credit
policy in the company which is a major strategic issue (Santosuosso 2014).
 It can be seen that both Axiata and Digi have high amount of debt in their capital
structure. This shows the absence of the effective strategy of using more equity capital
for raising the required capital. This is a major strategic issue.
 It can be seen that Axiata is not distributing adequate dividends and profits to the
shareholders because of the absence of adequate profit. Net loss in the present year
shows that the company has major strategic as well as operational efficiency related
issues in the business (Zeitun and Tian 2014).
It needs to be mentioned that the above discussed strategic and operational issues of these
companies can be resolved with the following recommendations:
 Axiata needs to remove the unprofitable products and services from its product
portfolio. The company needs to put more emphasis on the products and services with
higher gross profit margin. After that, the company needs to ensure increase in the
existing customer base since increased number of customer contributes to more sales
which eventually leads to increase in overall profitability. Moreover, the overall direct
costs of company need to be reviewed with the intention to reduce it as reduction in

15FINANCIAL ANALYSIS AND MANAGEMENT
direct costs is main to increase both operating profit and net profit (Zulfakarova et al.
2016).
 In order to improve liquidity, Axiata needs to get rid of useless assets as this would
reduce the wastage of resources. In addition, the company needs to switch from short-
term debts to long-term debts. Improvement of current and quick ratio does not only
depend on current and quick assets as this also depends on current liabilities.
Therefore, the strategy of the company will be paid off the current liabilities as early
as possible as this leads to the decrease in total current liabilities. This is a major
strategy that the company needs to adopt (Priya and Nimalathasan 2013).
 Obsolete and unused assets need to be liquidated quickly for increasing the overall
efficiency. This ratio can be used through the increase in sales by more promotions
and quick movements of the finished goods. In addition, effective credit strategies
need to be employed by accelerating the accounts receivable. Slow collection of
accounts receivable needs to be avoided. Credit terms need to be changed in relation
to the business offers through the reduction in time frame provided to the customers
for paying the outstanding amount. This would lead to the improvement in this
particular ratio along with the company’s efficiency.
 Both Axiata and Digi need to adopt the strategy to raise the required capital through
the issue of equity shares as this would reduce the obligation of repaying the debts
from these companies. Therefore, the management of the company needs to undertake
a debt restructuring strategy. Most importantly, the company needs to ensure increase
in its sales as well as profit which can be achieved through price rise, increase in sales
or reduction in cost. This extra generated cash can be utilized for paying off the
existing debts (Adewale and Ajibola 2013).

16FINANCIAL ANALYSIS AND MANAGEMENT
 Axiata is recommended to improve its profitability so that more amount of profit can
be distributed among the shareholders. This would improve the EPS and dividend
pay-out ratio of Axiata. Apart from this, there is a need for shift in the growth strategy
of the company in which the company will decide to expand less of its earnings to
seek growth and expansion and therefore, leaving a huge share of profit available to
be returned to the equity shareholders in the form of dividend. This will help in
gaining the trust of the investors of the company.
Conclusion
The above discussion involves in the analysis of the financial performance of Axiata
and Digi on the basis of five categories of ratio analysis. The outcome of the report states that
both the companies have performed well in certain areas and their performance has
deteriorated in certain areas. However, on the overall basis, it can be that Digi has better
financial performance than Axiata because of the better performance of Digi in most of the
financial areas. Axiata has certain major strategic and operational efficiency related issues in
the areas of profitability, liquidity, efficiency, capital structure and market performance.
These issues are creating major negative impact on the performance of the company over the
last five years. At the same time, Digi also has certain major issues in its capital structure and
this is because of the presence of high amount of long-term debts in the capital structure that
has increased the obligation on the firm to make the repayment of the debts. Therefore, the
requirement for both the companies is to adopt appropriate financial strategies in order to
revive the whole situation. The above analysis discusses about certain recommendations and
the managements of both Axiata and Digi are required to take into account these
recommendations with the intention to overcome the strategic and operational efficiency
related issues. However, on the overall basis, Digi has better financial performance than
Axiata.

17FINANCIAL ANALYSIS AND MANAGEMENT

18FINANCIAL ANALYSIS AND MANAGEMENT
Part 2
Introduction
Public listed companies requires large amount of capital for different purpose; such as
in order to facilitate any business expansion plan or for the development of new product line
and others. They can generate this long-term finance from internally or externally. It is
required for the public listed companies to select the appropriate source of finance based on
the requirements. At the same time, it needs to be mentioned that long-term monetary sources
create impact on the weighted average cost of capital (WACC). The first aim of this report is
to discuss about five specific types of external funding source along with the considerations
that need to be made. The second part aims at discussing about different aspects of WACC
and the influence of long-term finance on it.
Five Difference Sources of External Finance
The following discussion shows the five types of external funding source obtainable
for a public listed company.
New Equity Share – A pubic listed company can raise the required capital through the issue
of ordinary share or equity share. The equity shareholders are provided with higher amount of
dividends, but there is higher risk involved in this external finance from the investors’
perspective. Under this particular financing, new equity shares are allotted to the shareholders
as per the capital requirement. This does not put any obligation on the company for providing
any dividend to the shareholders in case there is no profit (Zeitun and Tian 2014).
Preference Share – A public company has the option to issue preference shares with the aim
to raise the required capital through external financing. However, preference shares have
certain preferential rights over the ordinary shares as the companies are needed to pay the
dividend first to the preference shareholders and then to ordinary shareholders. In the time of

19FINANCIAL ANALYSIS AND MANAGEMENT
financial difficulty that makes the company unable to pay dividend, the preference
shareholders have possessed the right to take over control on the company from ordinary
shareholders by exercising their power (Zeitun and Tian 2014).
Debentures – A public listed company may raise the required additional capital through the
issue of a formal document named Debenture. Debenture is considered as a certificate of
indebtedness issued by the company. The company has the requirement to make the payment
of a fixed rate of interest on the debentures and it needs to be paid after the prior-mentioned
number of years. For this reason, business organizations with good record of profitability
along with high financial health can use this particulate external source of finance (Fatoki
2014).
Government Loans/Grants – A government loan or grant can be considered as a financial
award provided by the local, state or federal government. This is a gift which does not
requires financial assistance or technical assistance like guarantee on loan, interest subsidy
and others. It is not expected that the grantee will repay the money. A public company needs
to apply for the government loans as it is not donated. This is an extremely competitive
process in the presence of complex paper work (Bhattacharya and Londhe 2014).
Venture Capital – This funding source is same as the issue of equity shares, but the
difference is that the investors in this are dissimilar set of people. These investors are the
Venture Capitalists. They are interested to invest in a new business operating in the initial
stage. These investors undertake detailed analysis before making the investments. Venture
capitalists exit the company once it start getting a good assessment (Mina, Lahr and Hughes
2013).
It is needed for the Board of Directors of the public listed company to consider at the
time to select the type of financing to use. They are discussed below:

20FINANCIAL ANALYSIS AND MANAGEMENT
Risk – The Board of Directors is needed to assess the risk associated with each source of
financing. The directors are required to assess all the relevant aspects in order to ensure that
whether they want to select a source with higher risk or lower risk (Alnajjar 2015).
Ownership – Ownership is another crucial aspect that needs to be considered by the Board of
Directors. They need to ascertain that whether they want to share the ownership of the
company or not as a cost of raising the required capital. For example, ownership is shared in
equity financing, but debt financing does not demand the same (Acaravci 2015).
Duration – The Board of Directors of the business needs to consider the duration of the
finance or the time needed for repaying the debt at the time of choosing the type of financing
to use.
Debt Capacity – The Board of Directors needs to ascertain the level of leverage as well as
the current liquidity position before selecting the appropriate source of finance. This will
provide the directors with the view that how easily the company will be able to meet the
requirements of the lenders.
Weighted Average Cost of Capital
Weighted average cost of capital (WACC) can be considered as a financial ratio that
aids in the calculation of a firm’s cost of financing and acquired assets through the
comparison of debt and equity structure. Therefore, this helps in measuring the weight of debt
along with the actual cost of borrowing money in order to finance business expansion and
new capital purchase on the basis of the current level of debt and equity structure of the
company (Tham and Vélez-Pareja 2019). The typical use of WACC is seen by the
management with the aim to decide whether the company needs to use equity or debt for
financing the new purchase. This ratio is considered as very inclusive as this undertakes
averaging all capital sources that includes long-term debts, common stocks, preferred stocks

21FINANCIAL ANALYSIS AND MANAGEMENT
and bonds with the aim of measuring an average cost of the borrowing funds (Tham and
Vélez-Pareja 2019).
It is said that the long-term funding sources employed by a company affect the
WACC. At the time of the evaluation of this particular statement, it can be seen that two
long-term sources of financing are acceptable in the capital market; they are equity financing
and debt financing (Hoque, Hossain and Hossain 2014). Capital structure is a company’s
overall configuration of monetary financing. Changes in the capital structure affects the
aspects such as net income, cost of capital and liabilities of the listed companies. The total
cost of capital of a company is measured by the WACC. Assuming that the cost of debt is not
same as the cost of equity capital and therefore, change in capital structure would alter the
WACC. Cost of debt is typically lower than the cost of equity; thus, increase in the equity
financing as a medium of long-term finance would usually cause increase in the WACC
(Hoque, Hossain and Hossain 2014).
At the same time, large listed companies also use debt financing as a source of
finance. One major factor associated with the debt financing is the rate of interest in which
banks lend funds. Due to the moderations in the interest rates, there is development of
fluctuations in the risk-free rate that is an investment’s theoretical rate of return having no
financial loss risk. This creates impact on the WACC of a company because of the
importance of the risk free rate in the calculation of cost of capital (Vătavu 2015). Due to the
fluctuation in the interest rate on the debts, this creates challenge for the listed companies in
predicting the future cost of capital. Due to this, a listed company can end up with lesser or
greater cost of capital than expected as a result of the fluctuation in the interest rate.
Therefore, this can crate major negative impact on the WACC of the company. It is required
for the public listed companies to frequently update the cost of debt due the fact that the cost
of debt tends to react to the fluctuation in the rate of interest (Vătavu 2015).

22FINANCIAL ANALYSIS AND MANAGEMENT
Conclusion
It can be seen from the above discussion that there are five types of external source of
finance that a listed company can use to raise the required capital; they are equity share issue,
preference share issue, debenture issue, government grant and venture capital. As per the
above discussion, four factors are required to be considered by the Board of Directors a
public company while selecting the appropriate source of external capital; they are risk,
ownership, duration and debt capacity. The report also indicates towards the fact that both
debt financing as well as equity financing affects the WACC.

23FINANCIAL ANALYSIS AND MANAGEMENT
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