1 TBA 612 – Financial Management (English Program) Submitted to Grad. Office via email by: Mar 8, 2021 Student Name: _______________________________ Student ID: _______________________________ 2 1.1 Financial Cost ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ 1.2 Liquidity ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ 1. Please explain why prudent financial management will maximize Shareholders’ wealth, in the following aspects 2. A. What is Working Capital ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ __________________________________________________________________________ 3 ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ 3. 22.9%41.3%ROE 14.1%13.8%ROA 11.7%13.2%Net Profit Margin 24.9%29.0%Gross Profit Margin 1.5 1.1Debt Service Ratio 8.7 4.7Time Interest Earn 38.5%66.7%Debt Ratio 0.9 1.1Current Ratio 2017 (A)2016(A) 100.0% 130.0100.0% 120.0 Total Liabilities & Equity 61.5% 80.033.3% 40.0Total Equity 38.5% 50.066.7% 80.0 Total Liabilities 26.7 63.6Total Long Term Loan 23.3 16.4Total Current Liabilities 100.0% 130.0100.0% 120.0Total Assets 83.0% 107.985.0% 102.0Total Non-Current Assets 17.0% 22.115.0% 18.0Total Current Assets Statement of Financial Position 19.4% 30.421.2% 26.5EBITDA 11.7% 18.413.2% 16.5Net Profit 2.9% 4.63.3% 4.1Income Tax 14.7% 22.916.5% 20.7Earning before Tax 2.2% 3.54.5% 5.6Interest 16.9% 26.421.0% 26.3EBIT (Net Operating Profit) 8.0% 12.58.0% 10.0 Total Selling & Admin Expenses 2.8% 4.43.0% 3.8Administration Expenses 5.2% 8.15.0% 6.3Selling Expenses 24.9% 38.929.0% 36.3Gross Profit 75.1% 117.371.0% 88.8 Total Cost of Goods Sold 14.1% 22.016.0% 20.0 – Overhead Cost 11.0% 17.210.0% 12.5 – Direct Labour 50.0% 78.145.0% 56.3 – Raw Material Cost of Goods Sold 100.0% 156.3100.0% 125.0Sales (%)2017 (A)(%)2016(A)Unit: Million Thai Baht ____________________________________________________________________________ B. What’s happen to the company which has poor Working Capital management If you were a CFO of this ABC Co.,Ltd, and you received the financial report for 2017 comparing to 2016 with Ratio analysis as shown below, what is your recommendation to improve the company’s performance. 4 3.1 Current Ratio in 2017 dropped to 0.9 times, comparing to 1.1 times in 2016. Is this good or bad in term of liquidity of the company _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ 3.2 Please comment on Financing Structure of the Company (Debt Ratio) _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ 3.3 Please find the reason why Gross Profit Margin was dropped to 24.9% in 2017, comparing to 29% in 2016. What is your recommendation to improve the Gross Profit Margin _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ 5 assumptions: Assumptions for CAPM 4.1 Dividend Growth Model
a. Please find Cost of Equity by using the CAPM model r = ____________% Share Price Valuation (Dividend Growth Model) The Company paid dividend at 2 Baht/Share in 2018. b. Dividend per share for 2019 (D1) = _________Baht/Share – Average return of the stock market is 10% per annum ….(Rm) – 30 years Government Bond yield = 3.5% …..(Rf) – b (beta) of XYZ stock = 1.2 ……(b or beta) 3.4 Please explain why in 2017 ROA increase while ROE decrease _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ r = Rf + (Rm-Rf)*b 4. XYZ Public Company Limited expects that the company will have a constant growth (g) at 3% per annum. CEO would like to know the fundamental value of the company’s share. As a CFO, please prepare the share valuation based on the following methodologies and 6 c. Market Value per Share (Po) = _________Baht/Share Formula: Po = D1 / (r – g) 4.2 Market Comparable Method (P/E ratio) – The company forecast to have an Earning per Share (EPS) (or Net Profit/Share) for 2019 = 2.5 Baht/Share. – P/E Ratio of the Industry = 15 times – P/E Ratio of the comparable stocks are as follows: o Stock A: P/E = 15 times o Stock B: P/E = 17 times o Stock C: P/E = 16 times o Stock D: P/E = 17 times d. Please find the market share price for XYZ stock by using the Market Comparable method: (Price = EPS x P/E) Market Value per Share = ______________Baht/Share 4.3 Recommendation If the current market price for XYZ company is 30 Baht/share, what is your recommendation ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ ________________________________________________________________ 7 5. Please explain (a) the steps for Capital Budgeting and (b) its major decision criteria (IRR, NPV, and Pay Back Period) _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ 8 6. Bond Face Value : 1,000 Baht Maturity : 5 years Coupon : 5% YTM (or Required Rate of Return) : 7% Bond Price = ___________ Baht b. What kind of Risks associated with Bond Please explain why ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ a. Please calculate the Bond Price if: 9 ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________