Table of content Executive summary
1.Introduction 4 1.1. Overview of Adelaide Brighton Limited 4 1.1.1. History 4 1.1.2. Industry 4 1.2. Major competitors 5 1.2.1. Boral Limited 5 1.2.2. Fletcher Building Limited 5 1.2.3. Brickwork Limited 5
2.Capital structure 6 2.1. Leverage 6 2.1.1. Current ABC’s leverage 6 2.1.2. Recent history of ABC’s leverage 6 2.2. ABC’s capital expenditures and its financing 9 2.3. Comparison of ABC’s capital structure with similar companies 10 2.4. Characteristics of the company influencing the leverage policy 11 2.4.1. Tax advantage 11 2.4.2. Corporate tax rate 11
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This report also uses some forecasting technique to evaluate the future position of the company. The discount rate (WACC), which incorporates the risk-free rate and risk factor for individual stock, is the key driver of share prices. The sensitivity analysis shows that the theoretical share price is very sensitive to change in WACC. Thus, slightly changes in WACC will lead to a significant impact on the current stock price. The factors that can take the place of WACC such as market return, the company’s beta, risk free rate, and tax rate should be used to observe the fluctuation of stock price which is WACC forecast. This may indicate that ABC value is currently overvalued since the valuation of the share is slightly lower than the actual share price. In addition, although the value of ABC might increase in the future, share price is changed by the movement of WACC. Therefore, it should not hold the shares in the company.
1. Introduction
1. Overview
Adelaide Brighton Ltd is an Australia-based company which engaged in manufacture and distribution of cement, and cementations products, lime, ready mixed concrete, aggregates, sand and concrete products. It’s operate centre is on Birkenhead, a suburb of Adelaide, from where product is shipped to markets around the Australian coast and overseas. The company has strong developed from a small
We use Capital Asset Pricing Model (CAPM) approach to calculate the cost of equity. The formula of CAPM is re = rf + β × (E[RMkt] – rf).
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In words Newark General Hospital had no affect of volume to the costs of the Hospital, so, there was no change in the volume, which leaded to higher cost.
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1. A brief history of the two organisations, and their objectives, in as far as they
Financial Management Introduction = == == == ==
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