Corporate Finance

• This is an individual task. Remember that as a student you are bound by the school ethics and all the work you submit should be of your own. • You are required to answer all questions in the proposed assignment. • You should prepare your answers with the objective of applying all the knowledge learned in class that corresponds to the course content. • You should demonstrate thorough understanding of finance concepts and principles. The student’s work will be assessed by depth of analysis, solid

judgments, logic of statements, and understanding of implications of finance and business. For calculations, you should show all your workings and the results.

Submission file format: You should submit all your answers in one pdf file, clearly identifying your answer to each question separately. In your file submission, you should include only your answers. You should not include the questions to avoid high similarity percentage on Turnitin.

Formalities:

• Font: Arial 12,5 pts. • Text alignment: Justified. • The in-text References and the Bibliography have to be in Harvard’s citation style.

Submission: Week 6 – Via Moodle (Turnitin). Sunday 13th November, 2022, 23:59hrs.

Weight: This task is a 40% of your total grade for this subject.

This task assesses the following learning outcomes:

• Outcome 1: Demonstrate a deep understanding of the theory and practices of financing a firm and its capital structure. • Outcome 2: Describe and analyze the trade-off between paying dividends and retaining the profits within the company. • Outcome 3: Explain the purpose and procedure related to stock repurchases. • Outcome 4: Evaluate a firm going from private to a public company. • Outcome 5: Discuss and analyze the benefits of leasing versus ownership of assets. • Outcome 6: Analyze the concepts underlying the firm’s cost of capital. • Outcome 7: Discuss the forms of acquisition. • Outcome 8: Critically evaluate what is financial distress.

You are required to choose a public company in Consumer Goods industry (you can find it in the list https://consumergoods.com/top-100-consumer-goods- companies-2021) and prepare a report on the following eight tasks, using its annual report for year 2021 (in comparison with year 2020) and any additional information that you can find publicly on Internet.

1. Explain briefly the company mission, business activities, corporate values and anything else that you find useful for understanding the context in which the company operates.

2. Describe the capital structure of the company and its choice in planning the financing mix. Calculate its debt ratio and equity ratio.

3. Describe the dividend and payout policy of the company. Does the company pay a regular cash dividend? Calculate the payout ratio. Did the company arrange share repurchase, stock dividends or stock splits? If so, explain the details of these arrangements.

4. Explain the details of the company IPO procedure and subsequent secondary offerings.

5. Does the company use leasing? If so, give the details of these arrangements.

6. Calculate the cost of capital for the company. Explain the origins of input information (i.e., the data that you used for calculation). Show the details of your calculations.

7. Did the company go through mergers and acquisitions in the past? Give the details.

8. Did the company face financial distress in the past? If yes, how did it overcome it? If not, explain what procedures the company has in place to mitigate the risks.

Each of eight tasks has equal weight (12.5% of total)

Rubrics

Descriptor 9-10 The student demonstrates an excellent understanding of the

concepts. 8-8.9 The student demonstrates a good understanding of the concepts. 7-7.9 The student demonstrates a fair understanding of the concepts. 6-6.9 The student demonstrates some, but insufficient understanding of the

concepts. 3-5.9 The student demonstrates insufficient understanding of the concepts.

They may mention some relevant ideas or concepts, although it is clear that the relationship between them is not understood by the student.

1-2.9 The student demonstrates insufficient understanding of the concepts and does not mention any relevant ideas or concepts.

0 The student leaves the question blank or cheats.