Evaluate the use of market multiples, Financial Management

Assignment Help:

The annual report and accounts for Astra Zeneca plc and Epistem Holdings plc and other relevant financial information are available in the ‘TMA 02 Resources folder' in the Assessment and Revision Resources section on the B831 website.
(a) Calculate the following for Astra Zeneca plc and Epistem Holdings plc:

• EV/EBITDA

• PE ratio

• price-to-cashflow

Calculate the ratios using financial information at the financial year-end (Astra Zeneca plc: 31 December 2010; Epistem Holdings plc: 30 June 2010).

(b) Using your results from (a), the sector financial information provided and any other information necessary, calculate and recommend a share value that Astra Zeneca plc might offer for Epistem Holdings plc. Assume a friendly take-over, that is, the Epistem Holdings plc board are in favour of the acquisition by Astra Zeneca plc.

Explain and justify your recommended share value.

(c) Critically evaluate the use of market multiples, in company valuation, in this scenario.

Use examples, numerical or qualitative, from Astra Zeneca plc and Epistem Holdings plc to illustrate and support your discussion.

Your discussion should consider, briefly, alternative valuation approaches.

(d) Explain how Astra Zeneca plc's choice of funding the (hypothetical) acquisition will be influenced by whether the offer to Epistem

Holdings plc shareholders is in:

• cash, or

• shares, that is, Epistem Holdings plc shareholders receive one share in Astra Zeneca plc in exchange for one share held in Epistem Holdings plc.


Related Discussions:- Evaluate the use of market multiples

How do we calculate the payback period, How do we calculate the payback per...

How do we calculate the payback period for a proposed capital budgeting project? What are the major criticisms of the payback method? We compute the payback period for a proposed

Valuing a bond between coupon payments, Most of the time, an in...

Most of the time, an investor buys a bond between coupon payments. In such transaction, the buyer must compensate the seller of the bond for the

Determine the economic viability, The purpose of this financial analysis is...

The purpose of this financial analysis is to determine the economic viability during the last five years of the Lance Company and to advise our client on whether the acquisition of

State the term- dealing with general risk, State the term- Dealing with gen...

State the term- Dealing with general risk Part  of  the  strategic  decision  making  process  is  to  analyse  all  risk  factors  involved  with pursuing a specific course of

Irr and npv, (a) Lonesome Gulch Mines has a standard deviation of 42% per ...

(a) Lonesome Gulch Mines has a standard deviation of 42% per year and a beta of 0.10.  Amalgamated Copper has a standard deviation of 31% a year and a beta of 0.66.

Financial equivalent of the balance, The Federal Minister for the Environme...

The Federal Minister for the Environment is worried about the Greenhouse Effect, one outcome of which would be that Adelaide would have a subtropical climate by the year 2015. This

Part 1: Contingency plan, Create contingency plans for the following scenar...

Create contingency plans for the following scenarios: • One of your highly qualified consultants has given three months notice and is planning to move to a competitor after this ti

Illustrate the operating leverage, Q. Illustrate the Operating Leverage? ...

Q. Illustrate the Operating Leverage? Operating Leverage: - The operating leverage perhaps defined as the tendency of the operating profit to differ disproportional with sales.

Pay in interest over first year of its eurodollar loan, A company borrows $...

A company borrows $1,500,000 at LIBOR plus a lending margin of 1.25 percent per year on a six-month rollover basis from a London bank.  If six-month LIBOR is 4 ½ % over the first s

Explain the term dividend cover, Dividend cover Dividend cover measure...

Dividend cover Dividend cover measures the relationship among earnings per share and net dividends per share. The higher the altitude of dividends for any given level of EPS t

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd