Risk Profile Analysis of Thomas Cook and Firm Value Analysis of Walmart Inc. and Evaluation of BP pl

Task 1: Risk Profile Analysis of Thomas Cook

This coursework should be presented in the form of a Management Report which is divided into sections as follows: Title/Front Page Students Name and Matriculation Number Course, Name of the Module, Word Count Contents Table, Coursework Tasks, Bibliography and References, Appendices. Coursework wordcount should be 3500 words (excluding appendices) and in typed format.

1. Thomas Cook Group Plc went into compulsory liquidation in September 2019 without any clear warnings of the difficult business conditions in the 2018-19 annual report. As an equity analyst, undertake a Risk Profile Analysis of Thomas Cook plc. for the last five years of its operations. More specifically, using both accounting and market based risk measures, estimate and explain the meaning, significance and sources of the key risks linked to the company.                                           

This analysis must cover the following lines of investigation:

Analysis of sales Revenues growth rate and its forecasts clearly identifying the assumptions behind the forecast.

 

Analysis of firm’s business risk (operating profit margin, operating leverage, asset turnover and any other ratio linked to the business risk of the company).

Analysis of firm’s financial risk (debt ratio, financial leverage, capital structure).

Analysis of the systematic (market) risk of the company over the last 5 years.

Analysis of Return on Assets and Return on Equity and highlighting the drivers behind any change in these ratios.

In light of above analysis, what sort of actions must have been taken by management to control the key risks.

Students are expected to undertake comparative trend analysis of the key ratios that highlight any aspect of risk.                                           

2. Walmart Inc. sold its majority stake in Asda plc. to TDR Capital in October 2020 in a deal that valued Asda plc at £6.8 billion. Undertake a comprehensive analysis of this deal and identify the main drivers behind this price tag. Students should use the following firm value models in their analysis.                                           

 

Net Asset Value Model                                      

The Dividend Discount Valuation Model

The Price/Earnings (P/E) Ratio approach

Cash flows based Model

 

3. Soaring global commodity prices have made BP a ‘Cash Machine’, CEO BP plc. The energy giant left its dividend unchanged but said it would buy back an additional $1.2bn of shares as the group continued its efforts to win back investors after the share price dropped last year to a 25-years low”.

BP boosts buybacks as oil and gas prices create ‘cash machine’. FT.Com, 2/11/2021

In the light of the above statement, critically evaluate the dividend policy of BP plc.                                  

General Guidelines:

Please download the (annual) Income Statement and Balance sheet data for this coursework from reuters.com.

For Revenue forecast, EPS forecast, and DPS forecast, please use marketscreener.comor www.ft.com. You can use any other source as well if you do not agree with these forecasts.

For historical price data, students can use investing.com

Each task should be concluded separately in that section (end of report conclusion is not required).

Students can compare company performances even if all the companies (included in the comparative analysis) are not reporting in the same currency. This is possible as most of the ratios and growth rates are in percentage and hence currency neutral. For example, sales growth rate is referred as annual percentage growth rate, ROA is %, Inventory turnover is in times.