Financial Management is an integral part of the global strategic goals in a dynamic agile
and consistently changing competitive environment. The importance of the
Financial strategy alignment with the corporate strategy cannot therefore be
overemphasized. In connection with this, Value based management can be
described as the bloodline of the strategic financial strategy by featuring on the holistic
valuation of the wealth creators. In this assignment, you are required to select one
company as a case study using the following criteria;
The company should be:
a) Growing fast in terms its annual sales over the past five years
b) Has acquired a minimum of five subsidiaries in the last 10 years and has an
international outlook for example owning subsidiaries in foreign countries
c) (c) Clearly identified business segments and stakeholders
d) (d) Viability of the company’s financial synopsis in the past 5 years together with
detailed financial statements for the same period. The financial statements and financial
synopsis should not be older than the year 2016
a) (e) It should have an explanation or provide sufficient information to evaluate
its financing, wealth creation, risk analysis and financial performance analysis
- Provide a case background explaining:
(i) The industry under which the company operates and the strategic trends
experienced in the past 5 years
(ii) The company growth and financial strategy - Evaluate various mergers and acquisitions strategy options and apply the
concept of shareholder value creation and divestitures(AO2)
a) Explain the Acquisitions by the selected case study company in terms of:
(i) Major Mergers and acquisitions in the past 5 years
(ii) Financial performance by using concepts learned in this course
(iii) Subsidiaries where the company divested and the rationale for divestiture. Illustrate
your answer with relevant calculations. Your assumptions should be stated
(iv) Evaluate the company’s Sales growth and synopsis based on the relevant key
financial performance indicators
b) Based on assumptions of your own choice, provide relevant calculations to demonstrate
how you will measure risks associated with two of the identified risk factors
inherent of such acquisitions. Be specific on each of the acquisition given the
different contexts and industry related dynamics.
Risk analysis1 - By applying financial theories learned in this course, critically analyse and
measure the risk and financial performance (apply advanced financial tools in your
answer). Your explanations should converge on your insights regarding how the risk
assessment impacts on the corporate strategy.(AO1) - Based on financial risk models and theories, explain your advice to the company
in terms of how it will measure and manage risk. Your advice should incorporate
alignment of your suggested risk management advice to the corporate strategy.(AO4)
Analysis of the Financial Perspective - Based on the case study company you have selected, critically analyse the financial
performance perspective on the following aspects.(AO1)
(a) Explain the capital structure of the company
(b) Trend analysis based on sales, research and development and cost of sales
(c) Company cost structure
(d) Ratio analysis
(i) Profitability ratios
(ii) Leverage ratios
(iii) Liquidity ratios
(iv) Efficiency ratios - Stock wealth analysis
(i) Average yearly returns in the past five years
(ii) Market value added (MVA)
(iii) Estimation of cost of capital - Valuation Perspectives
(a) Economic value
(b) Equity spread
(c) Discounted cash flow valuation (Based on the past five years) - How does the answers you have provided in question 5, 6, and 7 reflect on
alignment of various management perspectives to the corporate strategy? Using
Financial performance
theory/theories explain how you will achieve alignment to strategy and overall
corporate performance. - Analyse and apply financial cost allocation models to achieve corporate strategy
alignment and performance in your case study company2
(AO3)