Sunday, May 17, 2020

Corporate Finance - 4881 Words

Table of Content Executive Summary 3 1. Introduction 4 1.1 Overview of Harvey Norman Holding Limited 4 1.2 Major Competitor 5 1.2.1 JB Hi-Fi 5 1.2.2 Woolworth 5 2. Capital Structures 6 2.1 Types of Funding 6 2.2 Recent Trends of Leverage 7 2.3 Comparison of capital structure with similar companies 9 2.4 Capital expenditures and its financing 10 2.5 Important factors influencing the use of debt financing 10 2.5.1 Tax Advantage 10 2.5.2 Corporate Tax Rate 11 2.5.3 Credit rating 11 2.5.4 Interest rate 11 2.5.5 Company’s Industry 12 2.5.6 Company’s growth rate 12 2.5.7 Some other arguments about Harvey Norman 12 2.6 Evidence of financial†¦show more content†¦HVN appropriate share price is $4.23 which is $0.12 higher than the actual closing price of $4.11. It is recommended for the investor to purchase more of the company’s share as it was undervalued. The sensitivity analysis shows the theoretical share price is very sensitive to change in WACC. Careful and continuous observation might be needed to constantly monitor the factors that can alter the WACC such as market return, the company’s beta, risk free rate , and tax rate. D/E ratio can also alter the WACC due to tax benefit on debt. This implies we should keep checking changes of the company’s capital structure, namely its financing decisions and activities because they are important factors to create value of the company. 1. Introduction 1.1 Overview of Harvey Norman Holding Limited Harvey Norman Holdings Ltd is a public company whose principal activities consist of an integrated franchising, retail, and property entity. As a franchisor it give franchises to independent business operator and as business owners HVN provide retail product for home and office with different range of categories such as electrical, computers and communications, small appliances, furniture, bedding and Manchester, home improvements, lighting, carpet, and flooring. HVN started it business since October 1982 with only one store. For the past 26 years they are experiencing massive growth. As at 7 Oct 2008, there were 192 franchised complexes aroundShow MoreRelatedCorporate Finance Notes1881 Words   |  8 PagesStudy notes By Zhipeng Yan Corporate Finance Stephen A. Ross, Randolph W. Westerfield, Jeffrey Jaffe Chapter 1 Introduction to Corporate Finance ..................................................................... 2 Chapter 2 Accounting Statements and Cash Flow.............................................................. 3 Chapter 3 Financial Markets and NPV: First Principles of Finance................................... 6 Chapter 4 Net Present Value....................................Read MoreNotes for Corporate Finance2082 Words   |  9 PagesCorporate Finance Notes * Chapter One: Introduce to Corporate Finance 1. Three Questions: A. What Long-term asset should be invested? Capital Budgeting B. How to raise cash for capital expenditures? Capital Structure C. How to manage short-term cash flow? Net Working Capital 2. Capital Structure: Marketing Value of Firm = MV of Debt + MV of Equity 3. Finance perspect and Accountant perspect: Finance: Cash Flow ! Accountant: A/R means profit ! 4. Sole proprietorshipRead MoreCorporate Finance69408 Words   |  278 PagesCorporate finance P. Frantz, R. Payne, J. Favilukis FN3092, 2790092 2011 Undergraduate study in Economics, Management, Finance and the Social Sciences This subject guide is for a Level 3 course (also known as a ‘300 course’) offered as part of the University of London International Programmes in Economics, Management, Finance and the Social Sciences. This is equivalent to Level 6 within the Framework for Higher Education Qualifications in England, Wales and Northern Ireland (FHEQ). For moreRead MoreCorporate Finance1421 Words   |  6 Pagesoperating earnings of the firm. The capitalization is to be made at a rate appropriate to the risk class of the firm. 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A. working capital management B. financial allocation C. agency cost analysis D. capital budgeting E. capital structure Refer to section 1.1 AACSB: N/A Difficulty: Basic Learning Objective: 1-1 Section: 1.1 Topic: Capital budgeting Read MoreCorporate Business Finance 7343 Words   |  30 PagesCorporate Business Finance Seminar 5 Project Finance Lauren Leigh Essaram 207507339 Ruvimbo Mukorera 206525531 27 September 2010 Submitted in partial fulfilment of the duly performed requirement of International Business Finance, School of Economics and Finance, University of KwaZulu-Natal Abstract Non-recourse financing has grown in popularity, especially in developing countries. It has done so more specifically in the basic infrastructure, natural resources and also in the energyRead MoreAdvanced Corporate Finance4303 Words   |  18 PagesUniversity of Puget Sound School of Business and Leadership BUS 434 Advanced Corporate Finance Professor Alva Wright Butcher Tues-Thurs 11:00-12:20 McIntyre 107 Spring Semester 2012 Office: McIntyre 111 I Phone: 253-879-3349 FAX: 253-879-3156 Office Hours: T-Th: 1:00-1:50 Wed: 9:30-10:30 And by appointment Note that I am always willing to schedule additional office hours by appointment. I check email frequently, so that is also a goodRead MoreEssay Corporate Finance1613 Words   |  7 Pages Why is corporate finance important to all managers? Corporate finance is a specific area of finance dealing with the financial decisions corporations make and the tools as well as analyses used to make these decisions. The primary goal of corporate finance is to enhance corporate value, without taking excessive financial risks. A corporations managements primary responsibility is to maximize the shareholders wealth which translates to stock price maximization. Corporate finance providesRead MoreCorporate Finance Essay1150 Words   |  5 PagesCorporate Finance Essay Most corporate financing decisions in practice reduce to a choice between debt and equity. The finance manager wishing to fund a new project, but reluctant to cut dividends or to make a rights issue, which leads to the decision of borrowing options. The issue with regards to shareholder objectives being met by the management in making financing decisions has come to become a major issue of recent times. This relates to understanding the concept of the agency problem. It deals

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