Business Finance Management

Running head: BUSINESS FINANCE MANAGEMENT 1 BUSINESS FINANCE MANAGEMENT BUSINESS FINANCE MANAGEMENT Table of Contents Question 2...................................................................................................................................................... 3 Question 3...................................................................................................................................................... 4 Question 4...................................................................................................................................................... 4 Question 5...................................................................................................................................................... 6 Question 6...................................................................................................................................................... 9 Question 7...................................................................................................................................................... 9 Question 8.................................................................................................................................................... 10 Question 9.................................................................................................................................................... 11 Question 10 .................................................................................................................................................. 12 Question 11 .................................................................................................................................................. 13 References ................................................................................................................................................... 14 BUSINESS FINANCE MANAGEMENT Question 2 The company which was demerged from BHP Billition in the financial year 2002 as BHP steel and later on as Bluescope Steel limited on 17 thNovember 2003. Based in Australia this company is engaged in produucing steel, where resources are coming from New Zealand, Pacific Islandsd and Asia. Right off the bat in 2004, BlueScope converged with the American firm Butler Manufacturing. During that time, BlueScope's Managing chief and Chief top dog was Kirby Adams. Such a consolidation was viewed as an essential move for the two organizations as they were comparative in character and non-covering in the business sectors they worked in, to such an extent that securing of Butler, situated in Kansas City, Missouri, would furnish BlueScope with admittance to United States and Chinese markets. Butler was established in 1901, worked in sixteen nations and zeroed in on non-private structure and building segment construction. At the hour of the consolidation, Butler had twelve creation offices across the United States, China and Mexico. In the year 2007, the organization obtained four organizations comprising of alarge portion of the United States possessions of the Argentinian firm Ternium, those being Steelscape, ASC Profiles, Varco Pruden Buildings; and Metl-Span, which was procured by NCI Building Systems in the year 2012. The four organizations had been held by the Mexican Grupo IMSA preceding their buy by Ternium. Steelscape began in 1996 as BHP Coated Steel and was initially claimed by BlueScope Minnis, Michael and Andrew (2017, 198) . BUSINESS FINANCE MANAGEMENT Question 3 The Financial Statement Analysis and understanding are essential to the dynamic interaction for leasers, investors, directors, and different gatherings. The outer examiner, for example, abank credit official, should respond to questions identified with an organization's profit limit, capacity to meet revenue and head commitments, capacity to deliver profits, and general monetary qualities and shortcomings dependent on the budget report investigation. The purpose of the financial statements is to deliver the accurate inofmration ot the users of the financial statements as the strategic business decisions are taken based on the information supplied by the data is collected and, in this way, Bluescope Limited will also be helpful in taking the necessary decisions if the data is authentic and accurate (Lessambo (2018, 279) .This will help BlueScope to cover all the aspects and understand the overall health and financial position of the business. Question 4 The income statement of Bluescope Steel limited reflects the sales majorky through Australian Steel Products and thereafter through Building Products Asia & North America. The segment revenue has increased in terms of the financial year. The cost of the raw materials and consumables have decreased from $3657 to $3521. The employee benefits expenses have increased minimally and overall, it can be said that the net profit for the company is $373.3 and when compared to the previous year it was 193.5 respectively. This implies that overall profitability of the business has improved in due to reduction in the expenses and the strategies formulated by the company which have been in implementation mode since the financial at 2019 Tsai (2017, 6628) . BUSINESS FINANCE MANAGEMENT Wellbeing and the balance sheet of the company it can be observed that the current assets have been reduced overall and this is due to the reduction in trade and other receivables and as well as sale out of the inventories. Cash and cash equivalents have been increased in comparison to the previous year and this also applies that the management is focusing more on improvement of the cash conversion cycle. In terms of the non current assets the company has invested in property plant and equipment and also resulted in reduction of intangible assets. The liability section of BluescopeSteel Limited defines the decrease in the trade and other payables from $1679 to $1597 and even the long-term borrowings of acompany has also produced which implies that the company is not only focusing on having a balance optimum capital structure but also is involved in circulation of working capital of the company so that the daily operations of the business can be run effectively. The results have been used to settle the applications of current as well as long-term nature and therefore it can be said that overall, the balance sheet of the company is sound and itis focusing on future viability. The cash flow statement is ablueprint of an organisation and itreflects the inflow and outflow of the money. In case of bluescope Steel limited the cash flow statement influence and net cash flow from operating activities has increased from $235.8 to $565.7 and this is apositive response for the company as the company will gain acompetitive advantage. Activities in the cash flow from investing activities reflects the payments towards the purchase of property and equipment and for the settlement of the intangible assets. The cash flow from financial activities reflects the inflow the cash through borrowings and at the same time the least liabilities have been repaired along with the difference to the shareholders and to non controlling interests and the subsidiaries. BUSINESS FINANCE MANAGEMENT Over the cash and cash equivalents at the end of the period has increased and this reflects that the company is moving in the right direction and the performance of the company may be enhanced in new future. Question 5 S&P Date Adj Closing price Average returns 4/1/2010 5/1/2010 4268.00 6/1/2010 4788.00 12.18% 7/1/2010 4560.00 -4.76% 8/1/2010 4390.00 -3.73% 9/1/2010 4221.00 -3.85% 10/1/2010 4550.00 7.79% 11/1/2010 4789.00 5.25% 12/1/2010 4990.00 4.20% 1/1/2011 5012.00 0.44% 2/1/2011 5089.00 1.54% 3/1/2011 5150.00 1.20% 4/1/2011 5288.65 2.69% 5/1/2011 5022.83 -5.03% 6/1/2011 4938.38 -1.68% 7/1/2011 4861.77 -1.55% 8/1/2011 4597.69 -5.43% 9/1/2011 3871.51 -15.79% 10/1/2011 4528.03 16.96% 11/1/2011 4233.08 -6.51% 12/1/2011 4147.85 -2.01% 1/1/2012 4524.44 9.08% 2/1/2012 4611.88 1.93% 3/1/2012 4483.05 -2.79% 4/1/2012 4582.56 2.22% 5/1/2012 3965.00 -13.48% 6/1/2012 4190.01 5.67% 7/1/2012 4482.66 6.98% 8/1/2012 4454.23 -0.63% 9/1/2012 4552.39 2.20% 10/1/2012 4685.49 2.92% BUSINESS FINANCE MANAGEMENT 11/1/2012 4697.96 0.27% 12/1/2012 4831.69 2.85% 1/1/2013 5084.68 5.24% 2/1/2013 5212.31 2.51% 3/1/2013 5173.60 -0.74% 4/1/2013 5382.77 4.04% 5/1/2013 4714.77 -12.41% 6/1/2013 4387.66 -6.94% 7/1/2013 4536.68 3.40% 8/1/2013 4568.10 0.69% 9/1/2013 4859.85 6.39% 10/1/2013 5131.42 5.59% 11/1/2013 4846.63 -5.55% 12/1/2013 4770.40 -1.57% 1/1/2014 4542.79 -4.77% 2/1/2014 4824.34 6.20% 3/1/2014 4996.67 3.57% 4/1/2014 5095.52 1.98% 5/1/2014 5112.96 0.34% 6/1/2014 5088.12 -0.49% 7/1/2014 5235.77 2.90% 8/1/2014 5250.64 0.28% 9/1/2014 4628.56 -11.85% 10/1/2014 4860.09 5.00% 11/1/2014 4520.82 -6.98% 12/1/2014 4419.70 -2.24% 1/1/2015 4339.89 -1.81% 2/1/2015 4629.81 6.68% 3/1/2015 4480.50 -3.23% 4/1/2015 4572.38 2.05% 5/1/2015 4411.46 -3.52% 6/1/2015 4205.60 -4.67% 7/1/2015 4161.55 -1.05% 8/1/2015 3702.18 -11.04% 9/1/2015 3523.66 -4.82% 10/1/2015 3739.36 6.12% 11/1/2015 3733.32 -0.16% 12/1/2015 3852.77 3.20% 1/1/2016 3544.90 -7.99% 2/1/2016 3483.99 -1.72% 3/1/2016 3890.36 11.66% BUSINESS FINANCE MANAGEMENT 4/1/2016 3992.73 2.63% 5/1/2016 3888.18 -2.62% 6/1/2016 3898.89 0.28% 7/1/2016 4224.63 8.35% 8/1/2016 4082.35 -3.37% 9/1/2016 4160.63 1.92% 10/1/2016 4046.25 -2.75% 11/1/2016 4016.17 -0.74% 12/1/2016 4087.88 1.79% 1/1/2017 4262.33 4.27% 2/1/2017 4373.85 2.62% 3/1/2017 4473.74 2.28% 4/1/2017 4433.61 -0.90% 5/1/2017 4252.79 -4.08% 6/1/2017 4397.53 3.40% 7/1/2017 4577.62 4.10% 8/1/2017 4540.76 -0.81% 9/1/2017 4450.40 -1.99% 10/1/2017 4523.32 1.64% 11/1/2017 4516.83 -0.14% 12/1/2017 4731.37 4.75% 1/1/2018 4862.76 2.78% 2/1/2018 4669.03 -3.98% 3/1/2018 4422.08 -5.29% 4/1/2018 4505.59 1.89% 5/1/2018 4549.20 0.97% 6/1/2018 4585.23 0.79% 7/1/2018 4663.68 1.71% 8/1/2018 4543.72 -2.57% 9/1/2018 4486.85 -1.25% 10/1/2018 4123.76 -8.09% 11/1/2018 4145.57 0.53% 12/1/2018 3980.15 -3.99% 1/1/2019 4264.80 7.15% 2/1/2019 4376.29 2.61% 3/1/2019 4384.59 0.19% 4/1/2019 4458.22 1.68% 5/1/2019 4438.16 -0.45% 6/1/2019 4646.40 4.69% 7/1/2019 4662.56 0.35% 8/1/2019 4448.59 -4.59% BUSINESS FINANCE MANAGEMENT 9/1/2019 4513.94 1.47% 10/1/2019 4593.07 1.75% 11/1/2019 4630.62 0.82% 12/1/2019 4692.90 1.35% 1/1/2020 4695.22 0.05% 2/1/2020 4192.59 -10.71% 3/1/2020 3114.62 -25.71% 4/1/2020 3595.08 15.43% 5/1/2020 3836.75 6.72% 6/1/2020 4070.72 6.10% 7/1/2020 4233.63 4.00% 8/1/2020 4469.63 5.57% 9/1/2020 4164.77 -6.82% 10/1/2020 4164.75 0.00% 11/1/2020 4787.33 14.95% 12/1/2020 5068.13 5.87% 1/1/2021 5049.37 -0.37% 2/1/2021 5141.77 1.83% 3/1/2021 5158.22 0.32% Question 6 Capital Asset Pricing Model Risk free rate of return 2.50% taken from the website Beta 0.85 Expected rate of return 5.50% taken from the website Rf +Beta*(Market risk -Rf) Cost of Equity 5.05% Question 7 Particulars Amount Expected dividend 14 Cost of equity -Growth rate 5.05%-0% Share Price $ 277.23 Cost of equity 5.05% BUSINESS FINANCE MANAGEMENT Growth rate 0% Dividend valuation model Particulars Amount 2018 14 2019 14 2020 14 2021 14 2022 14 Question 8 BUSINESS FINANCE MANAGEMENT The two graphical charge 7proposed another share price movement category which is used for analysing the fluctuations in the share price individually and in comparison, to S&P/ASX 200. Generally, share prices affected by a lot of factors suggest market movements increase and decrease in the cash flows and demand and supply of the products and other similar factors. This is valid at Bluescope Steel, where the offer cost has seen a25.6% return comparative with the market in the course of recent months. Market unpredictability and monetary vulnerability can be a significant drag on force, however beforehand solid stocks can rush to recuperate when certainty returns. In outline, great quality and force are pointers to the absolute best stocks on the most grounded upturns. This blend of elements can be asign to discovering shares that can intensify speculation returns over numerous years. In happy occasions, these offers can get costly to purchase. In any case, in unpredictable business sectors, there might be opportunities to get them at less expensive costs. In particular, it's an enormous cap share with openness to two persuasive drivers of venture returns in the financial exchange: top caliber and solid momentum. Quality and momentum are profoundly valued among financial backers Mall, Pinky and Kapil (2019, 29) .Great quality stocks are bound to be versatile, money producing organizations that can intensify venture returns over the long run. Momentum in cost and income is a pointer to stocks with positive patterns with the possibility to proceed. Therefore, it can be said from the overall analysis that the share of Bluescope Steel Limited is perfoming better then the industry benchmark as itcan be reflected by the benchmark Schillinger (2019) . Question 9 The cash flow from operating activites reflects the cash inloe from the customers or nay dividends recieved or extra income the company is earning along with the expenses incurred in BUSINESS FINANCE MANAGEMENT association with the generation of that income. In case of the fluctuation in the share price, the investors and shareholders may purchase or sell the shares according to the market price and this will also rsult in the overall profit of the business Soboleva (2018, 2034) .The cash flow from investing activities includes the cash disbuement via purchasing and selling of any fixed asset. The cash has been invested by the company in purchasing the assets and this will reflect to the investors and the shareholders that Bluescope Steel Limited thinks progressively. The cash flow from financing acitvities involves the inflow of capital in the form of shares or debentures and if the graph of the share price is analysed carefully it can be seen that the share price and its demand increased naturally. Question 10 The strategies to improve the cash flow have been determined below. The first and the foremost step is to collect the cash from the customers and to bring abalance between the cash conversion cycle. This would not only hence the proper accounts receivables management and the proper creditors management Tsai (2017, 6625). The review of the pricing strategies is also anecessary step and this would help the management to understand the viability of the market. This would help Bluescope Steel Limited to understand the pricing mechanism and set the new pricing strategies that would cater the mass amount of the customers (Zeidan, Rodrigo, and Offer 2017, 205). Identify and target new markets is also one of the investment strategies which is thoughtful and creative brainstorming that results in problem solving and identifying the potential customers and the competition. BUSINESS FINANCE MANAGEMENT Question 11 Wealth maximisation can be understood as the value of the business so that the shareholders held by its stockholders. The wealth maximisation, the abundance boost depends on incomes and not on benefits. In contrast to the benefits, incomes are accurate and distinct and therefore dodge any complexties in the world. Profit can undoubtedly be manipulative, if there is an adjustment in bookkeeping suspicion/strategy, there is an adjustment in benefit. There is an adjustment in technique for devaluation, there is an adjustment in benefit. It isn't the situation if there should arise an occurrence of cashflows Heminway (2017, 939) . Besides, wealth maximization presents amore limited term see when contrasted with abundance augmentation. Momentary benefit boost can be accomplished by the supervisors at the expense of long-term supportability of the business. Thirdly, abundance of wealth also considers the time estimation of cash. It is significant as Bluescope Steel Limited as awhole realize that adollar today and adollar one-year last don't have asimilar worth Khan, Zubair and Irem (2018, 740) . BUSINESS FINANCE MANAGEMENT References Heminway, Joan MacLeod. "Shareholder wealth maximization as a function of statutes, decisional law, and organic documents." Wash. & Lee L. Rev. 74 (2017): 939. Khan, Zubair Ahmad, and Irem Hussanie. "Shareholders wealth maximization: Objective of financial management revisited." International Journal of Enhanced Research in Management & Computer Applications 7, no. 3(2018): 739-741. Lessambo, Felix I. "Segment and Intermediary Financial Statements." In Financial Statements , pp. 277-297. Palgrave Macmillan, Cham, 2018. Mall, Pinky, and Kapil Gupta. "Impact of mergers on stock performance and risk of acquiring firms: Evidence from India." Drishtikon: A Management Journal 10, no. 1(2019): 27-46. Minnis, Michael, and Andrew Sutherland. "Financial statements as monitoring mechanisms: Evidence from small commercial loans." Journal of Accounting Research 55, no. 1(2017): 197- 233. Schillinger, Pierre, Reiner Braun, and Jeroen Cornel. "Distortion or Cash Flow Management? Understanding Credit Facilities in Private Equity Funds." Understanding Credit Facilities in Private Equity Funds (August 7, 2019) (2019). Soboleva, Yu P., V. V. Matveev, S. A. Ilminskaya, I. S. Efimenko, I. V. Rezvyakova, and L. V. Mazur. "Monitoring of businesses operations with cash flow analysis." International Journal of Civil Engineering and Technology 9, no. 11 (2018): 2034. Tsai, Chih-Yang. "The impact of cost structure on supply chain cash flow risk." International Journal of Production Research 55, no. 22 (2017): 6624-6637. BUSINESS FINANCE MANAGEMENT Tsai, Chih-Yang. "The impact of cost structure on supply chain cash flow risk." International Journal of Production Research 55, no. 22 (2017): 6624-6637. Zeidan, Rodrigo, and Offer Moshe Shapir. "Cash conversion cycle and value-enhancing operations: Theory and evidence for afree lunch." Journal of Corporate Finance 45 (2017): 203- 219.