Case Studies in Business Finance and Financial Analysis

Frontmatter

1. Starting a Small Business

Abstract

This study is concerned with a business venture into the unknown. Publishing is a notoriously risky business, particularly for the newcomer who is concentrating on one small area of publishing and who is far from enjoying the safeguard of diversification.

K. Midgley, R. G. Burns

2. The Effects of Budgetary and Other Governmental Measures on Profitability

Abstract

Here we are concerned with the impact of a credit squeeze on the trading profits of a retail departmental store. The reader is required to consider the several ways in which profits are affected by fiscal and monetary measures. Attention should be given not only to costs and prices but to rates of turnover. A further problem draws attention to the effect on return to capital employed of a permanent fall in turnover. (A little careful thought will make it possible to reproduce an approximate profit and loss account and balance sheet.)

K. Midgley, R. G. Burns

3. Raising Long-term Capital

Abstract

Many large expanding companies are unable to finance the purchase of new premises and equipment which they require, from the internally generated cash flow which accrues to the company. In such circumstances the companies will very probably raise further long-term capital from the public.¹ This case study examines how three companies, which operate in different industries, have raised their long-term finance. The case study has been designed so that one can obtain practice in choosing the type of capital a company could raise, and the terms which should be offered to the investing public.

K. Midgley, R. G. Burns

4. Evaluating Returns from Long-term Investment

Abstract

Most businessmen have at some time to decide whether or not to incur expenditure on new equipment, and such decisions are usually very important because of the long period over which they have an effect. This case study concerns a proposal to buy a rather expensive new machine. Some of the calculations involve discounting arithmetic and an understanding of basic discounted cash flow theory is assumed.

K. Midgley, R. G. Burns

5. Head Office Integration following a Merger

Abstract

This case study examines some of the problems affecting management and staff when head offices are integrated after the merging of two companies. Various problems are posed including the preparation of staff compensation terms, and a comparison of integration costs with benefits.

K. Midgley, R. G. Burns

6. Evaluation of an Ordinary Share

Abstract

This study raises two problems:

1.

The analysis of a company’s accounts and a consideration of facts known about the company, with a view to estimating the future performance of its ordinary shares.

 

2.

A consideration of the investment requirements of an individual, given details of income, marital position, wealth and ages. (Readers familiar with the authors’ Business Finance and the Capital Market may wish to refer to chapters 12, 15 and 16.)

 

K. Midgley, R. G. Burns

Backmatter