Financial Analysis of a FTSE 100 Listed Company

Task 1: Sources of Finance

Assume that you are the Finance Director of a big conglomerate (multinational) company, called ABC Plc. The Board of Directors are keen to add a FTSE 100 listed company to their existing portfolio. As the Finance Director, you are required to provide a confidential and professional advice relating to the purchase of this prospective company using appropriate financial information. Specific Instructions: Choose one FTSE 100 listed company and study the latest available financial information including annual reports and accounts of the company and undertake such further study and research as necessary to be able to respond to the tasks indicated below. The latest available set of reports and accounts and other financial information of the company can be obtained from the relevant company’s website. You are free to choose any company provided it is listed as a FTSE 100 company. Make sure you choose a company you are familiar with. Part of the skill-set of a graduate is to communicate clearly and accurately to the given audience. It is important that you take this into consideration when constructing your assignment. Please present these tasks as part of a report. Task 1 a) Using appropriate financial information, identify the current sources of finance (the FTSE 100 Company you chose) and other alternative sources of business finance available to the company. Note that your suggestion must be relevant and substantiated with valid reasons. (15 marks) b) Critically evaluate the cost implications of using both the existing sources of finance and the alternative sources of business finance available to the company. (25 marks) Task 2 “The capital structure of a company is an important component in understanding how the company is funded, the potential risk exposure and benefits associated with such capital structure. Others on the other hand, argue that capital structure is irrelevant”. Discuss. (18 marks) Task 3 Discuss the 3 key business valuations models (the PE ratio method, Dividend model and the Asset based model) (12 marks) Task 4 Value the FTSE 100 Company you chose using each of these 3 valuations methods named above. (25 marks) Note that marks will be awarded for Structure. Structure includes the orderly presentation of relevant material and the extent of research evidenced by the appropriateness and adequacy of in-text referencing. There must be a cover page and contents page, background and introduction – pages must be numbered. Recommendations must be realistic, relevant and capable of practical implementation. (5 marks) Total marks 100