Capital budgeting model, Financial Management

Develop a scenario for the future growth of the firm e.g. through using a SWOT analysis to identify an appropriate outcome (this will be covered in lectures)

• If it is to grow organically, identify the market opportunities for growth.

• If it is to grow by acquisition, identify the potential take-over target(s) and justify the choice.

• If it is to expand overseas, identify a possible joint venture partner in the country targeted.

• If it is to be acquired, clearly identify the reasons why, and the potential acquirer.

• Include analyses of the factors contributing to the decision, including any options discarded. 

Support the strategy

• Provide a capital budgeting model that demonstrates the financial business case for the chosen strategy. (Use a time period longer than 3 years for this model).

• Include equity or debt raising as necessary to finance the recommended strategy. The spreadsheets provided on the Damodaran web site may help (see above). If the firm has sufficient internal resources to fund the strategy, they must be clearly identified.

• Pay attention to the impact of the strategy on capital structure, gearing ratios, dividend payouts, any liquidity concerns, management strengths and weaknesses, etc.

  • Describe the characteristics of the financial facilities to be used for any funds raised.
  • Include management of financial risks as necessary.
  • Provide a financial profile of the firm after the growth strategy is complete i.e.

extend the Excel spreadsheet used in Step 3 forward by 3 years using the ratios calculated previously, (see Gitman et al., Chapter 3 for an example of how to do this) and then add the data from the first 3 years of the capital budgeting model.

Posted Date: 3/1/2013 12:31:19 AM | Location : United States







Related Discussions:- Capital budgeting model, Assignment Help, Ask Question on Capital budgeting model, Get Answer, Expert's Help, Capital budgeting model Discussions

Write discussion on Capital budgeting model
Your posts are moderated
Related Questions
Need for Simulation If the mathematical model set up could always be optimized by the analytical approach, then, there would be no need for simulation. Only when interrelation

Considering the following information, what is the price of the share as per Gordon’s Model? Details of the Company Net sales Rs.120 lakhs Net profit margin 12.5% Outstandin

A revenue bond is a special type of municipal bond distinguished by its guarantee of repayment from revenues generated by a specifie

How has the merger activity in the past decade affected the concentration of assets in the banking industry? A: Over the last decade, some commercial banks declined by twenty-o

State the objectives of Corporate financial Corporate financial objectives could be to: 1. Provide the link between business and the other entities in environmentand 2.

Return on Investment (ROI) In accounting it is a measure of the earning power of an industries asset. A high return on investments is desirable. ROI is widely described as net

The fundamental principle is that when a tree is used to value an on-the-run issue, the resulting value should be arbitrage free i.e., it should be equal to the o

How is international financial management different from domestic financial management? Answer:  There are three main dimensions that set separately international finance from

Explain how the cash budget and the capital budget relate to pro forma financial statements. The cash budget depicts the projected flow of cash in and out of the firm for fixed

Q. Graphic Presentation of Net Operating Income Approach ? Graphic Presentation of NOI (Net Operating Income) Approach: - NOI (Net Operating Income) approach is explained graph