Corporate finance and Financial Accounting Essay

Corporate finance and Financial Accounting - Essay ExampleHowever, it is the responsibility of the governing to formulate and implement appropriate strategies to deal with risks. For this case, the management of XYZ opted for acquisition of the company. XYZ sold itself to ABC International in exchange for $8.2 billion. After the acquisition, XYZ estimated that the worth of its shares would be placed at $100 per share. After the acquisition, ABC would stupefy the sole responsibility of selling the XYZs stock exchange affects situated in different countries that admit Netherlands, Belgium and Portugal. ABC Internationals operations ABC International is a leading global doer that deals with exchanges and the market for various forms of contracts ranging from agriculture to equity index. The corporation is based in the United Kingdom with its operations in Russell, Europe and some parts of the United States. The company operated under ABC Intl as the trade mark and name. The company is managed by a board of directors, who set high standards that help in day-to-day management of the company. However, there exist guidelines and regulations of the organization that must be followed from time to time, subject to adaptation by the board of directors. This ensures a fulfillment of the best interests of the organization in line with the rules and regulations of the company. ... The companys pecuniary analysis is as presented below Valuation ratio P/E Current 20.27 P/E proportionality (with extraordinary items) 20.27 P/E Ratio (without extraordinary items) 16.46 Price to Sales Ratio 6.61 Price to Book Ratio 2.46 Price to Cash Flow Ratio 12.39 first step Value to EBITDA 11.19 Enterprise Value to Sales 8.02 numerate Debt to Enterprise Value 0.13 Efficiency Revenue/Employee 1.27 Income per Employee 0.51 Receivables Turnover 10.34 add up addition Turnover 0.04 For the liquidity ratio, the current and the quick ratio both stand at 1.04 while the notes ration remains at 0.05 Profitability ratio Gross edge 70.00 Operating Margin 60.00 Pretax Margin 57.50 Net Margin 40.00 Return on Assets 1.20 Return on Equity 16.30 Return on Total Capital 12.50 Return on Invested Capital 12.88 Capital Structure Total Debt to Total Equity 30.00 Total Debt to Total Capital 20.50 Total Debt to Total Assets 3.00 Long-Term Debt to Equity 26.50 Long-Term Debt to Total Capital 20.00 precept for the acquisition The acquisition would ensure improvement in the ranking of the XYZ Corporation in the stocks exchange market. This is because of the fortify of products and leadership (Ehrhardt & Brigham, 2011). After the completion of the acquisition, the new company will focus on the improvement of financial services, leading to high growth potential. Diversification of risks will attract more investors to invest in the company, accordingly growth and expansion of the company (Nofsinger, Kim & Mohr, 2010). In addition, existing investors will be certain of their investment s, whereas the same venture will aim at increasing shareholders wealth through improved profitability. encyclopedism