What’s more, company stock in the form of stock options can be offered to employees and contractors as a meaningful form of incentive compensation. There is a strong point to consider is that the increased capitalization for the issuing business, since a market value is created by a public offering on a company's stock. The directors and shareholder of Al Hadharah Boustead REIT company can retain their stock and use it for varied activities. In additional, the greater access of business will take place to the capital markets for future capital inflow. In general terms, a Al Hadharah Boustead REIT company's valuation and debt to equity ratio will improve after going public, and at the same time, it will make it possible for Al Hadharah Boustead REIT company to receive much better terms from lenders.
Berkshire’s stock price increased considerably by 2.4%, from $83,490/share to $85,500/share, raising the market value of Berkshire Hathaway by $2.55 billion. During the same day Scottish power’s stocks price soared by 6.28%, from £441,88/share to £469,63/share. The
These benefits are often referred to as arising from synergy which accrues to the shareholders of the target as well as to those of the bidder. VF Corporation is offered something in excess of what they perceive to be the current value of those shares. In spite of the eurozone financial crisis, VF’s revenues rose by 20 per cent in constant dollar terms in Europe, while sales in Asia surged 43 per cent. This is the right time to take the Timberland to the next level, with expected 2011 revenues of $1.6bn, over half of which are generated internationally. For the full-year 2010, Timberland reported revenue of $1.4bn, an increase of 11.2% over the prior year and up 11.7% on a constant dollar basis.
- To be the preferred provider. Strategies to achieve the above mentioned goals: 1) Invest in projects that increase shareholders values : This object is one of the financial goals to invest properly. Marriott used discounted cash flow techniques to evaluate potential investment. It is beneficial because it is considered present time value. Projects which increase shareholder value could be formed with benchmark hurdle rates, the company can ensure a return on projects which results in profitable and competitive advantage.
Following his clients investment requirements, Angus will advise Judy to purchase Allison Green and 900 Stony Walk because these two properties have the highest NPVs of the four investments, $734,290 and $699,520, respectively (see Exhibit 6: Financial Analysis). As seen in Exhibit 6, both Ivy Terrace and The Fowler Building have a slightly higher IRR; however, NPV is the best determinant of a projects projected value. By investing in two properties, as opposed to only one, Judy will be better diversified and may receive decreased management fees resulting from increased economies of scale. Also, these two particular properties, with one being a residential property and the other a commercial property, benefit from even greater diversification than if Judy had, for example, invested in Allison Green and Ivy Terrace. Since we are not provided any information regarding Judy’s risk tolerance, I assumed that she will be risk averse because this is her first time investing in real estate.
Capital structure is the means by which a company finances its assets through a combination debt and equity. After analyzing the information for the capital structure, the recommendation is 50% preferred (5%, $50 par) and 50% common stock. This decision is based on the continued growth in net income coupled with the increasing growth of the EPS. This capital structure in year 9 had an EPS of 2.7%, year 10 3.2%, year 11 3.9%, year 12 4.8% and year 13 5.7%. The 50% Preferred and 50% Common Stock indicates a favorable trend.
In Mr. Buffett`s opinion, intrinsic value is the present value of the future expected performance. It`s estimated calculating the discounted cash flow of a business during its remaining life. It`s important because the DCF is the only logical way to evaluate the attractiveness of a business or an investment. Other alternatives to intrinsic value fall short in determining whether an investor is indeed buying something which is really worth and is therefore truly operating on the most basic principle which is aggregating value. The $2.55 billion gain in Berkshire`s market value of equity and the 6.28% jump on Scottish Power`s stock means that the acquisition was a win-win situation, creating value for both companies.
As outlined by the text, investor reaction is indicative that the acquisition of PacifiCorp would be value adding for both Berkshire as well as Scottish Power. The change in stock price is implicative that $43 billion is put to great use, as oppose to sitting in Cash and Cash equivalent section of Berkshire’s balance sheet. More importantly, because Berkshire already has an Energy Holding Company, PacifiCorp being a low-cost energy provider would enhance the company’s overall reach in terms of market share. Therefore there is the potential and high probability of synergy between MidAmerican Energy and PacifiCorp, resulting in the market perception that more value will be added to Berkshire overall. The text
Everything being equal, the WACC of a firm increases as the beta and rate of return on equity increases, as an increase in WACC means a decrease in valuation and a higher risk. A firms WACC is a very important both to the stock market for stock valuation purposes and to the company's management for capital budgeting purposes. In an analysis of a potential investment by the company, investment projects that have an expected return that is greater than the company's WACC will generate additional free cash flow and create positive NPV for stockholders. Since the WACC is the minimum rate of return required, the managers in the company should invest in the projects that generate returns in excess of the WACC. WACC is set by the investors (or markets), not by managers.
The sustainability for Rolls Royces plans for expansion can be assesed by wether or not their expansion will be able to assist the companies economic standing in the long run and wether or not the businesses expensees in the expansion will result in a financial gain for the business as oposed to a loss. Several segments of the businesses accounts such as the balance sheet illustrate wether or not the business will be able to cope with its plans for expansion in the long term. One of the most prodominant factors influencing Rolls Royces decision to expand the business would be due to the increased demand and growth for their product range in international markets which is illustrated by their increase of sales growth in these regions with China increasing by 11% and with the Middle East increasing by 17% , as well as reaching an all time sales high of 3,630 cars in 2013. This indicates that their is a growing global market and want for cars produced by Rolls Royce and in the high end car market , therefore Rolls Royce will want to try and expand their business and their production in order to try and cater towards this market as this will further result in increased revenues and will also assist the competitivness of the business. The gearing of Rolls Royce can give us an insight into how well they well be able to financially cope with the expansion and wether or not it will be capable of doing so.