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Factors usually companies considers before deciding debt or equity finance to be raised

3000 words - 25 references - Harvard -

Choose few LISTED COMPANY from within any of the following sectors: Utilities, Oil & Gas, Food & Beverages, Retailers, Telecommunications and Pharmaceuticals in Malaysia and update me I will be choose one of the company. - Assignment question attached - CF assignment guidelines attached . Required all the information as per guidelines) -1.0 INTRODUCTION • Purpose of writing • Scope of analysis • Objective 2.0Backgroundofselectedcompany (300words) - Nature of core business - Markets and products – Diversified? - Past Key Financial performance statistics ( Share price trend, ROCE trend, Dividend trend) - Future outlook of the industry - Key challenges 3.0 Maximizing shareholders wealth and other objectives of companies ( 300 words) 2.1 Maximizing shareholders wealth - What do you understand by ‘ max S/H wealth? - What do companies do to max S/H wealth? - Do you think this should be the primary objective? 2.2 Other objectives - What are the other objectives selected company claim to follow? - What could be the reason for the selected company to undertake these objectives? - Do you think these objectives are more important than maximizing S/H wealth for the selected company? u 4.0 External Sources of Long Term Funds ( 400 words)

4.1 What is external source of long term funds?

4.2 What is external equity funds? What is debt funds?

4.3 What are the ways listed companies may raise external equity funds? (Provide explanation of rights issue, offer for sale, placing) ( Provide explanation of factors companies usually considers when raising the type of external equity funds)

4.4 What are the ways listed companies may raise external long term debt funds? ( Provide explanation of debenture, loan stock, term loan, redeemable preference shares, hybrid instruments, finance lease). ( Provide explanation of factors companies usually consider when raising the type of debt finance)

4.5 What are the factors usually companies considers before deciding debt or equity finance to be raised? ( cost of raising, gearing level, market sentiments, interest rate movement, security, duration, etc)

5.0 Analysis of external long terms funds used by the company over the 5 years ( 500 words)

5.1 How much is the company’s issued share capital?

5.2 Did the company raise external equity fund?

5.3 How did the company raise the external equity fund? ( Provide details : eg rights issues – terms of issue, etc)

5.4 What are the debt finance used by the company? ( provide details eg coupon interest rate, redemption dates, secured/unsecured, etc)

6.0 Analysis of possible factors considered by the company when deciding the type of fund raised. (500 words)

6.1 Internal factors ( about 3 factors) - past performance - gearing level - ability to offer security - existing debt covenants - others

6.2 External factors ( about 3 factors) - economic climate - market sentiments - interest rate movements - tax rates - others (Note: provide evidence of good research and analysis, be critical)

7.0 WACC (500 words)

7.1 What is WACC

7.2 Importance of WACC?

7.3 How to compute WACC?

7.3.1 Return required by ordinary shareholders - Explain DVM, formula and its assumptions. - Explain CAPM, formula and its assumptions - Select, give reason and undertake the computation – explain the data to be used, how you obtain it and the choice and assumptions you made . Explain the statistical computations eg computation of beta, dividend growth rate)

7.3.2 Return required by debenture holders and other lenders - Explain the model, assumptions and undertake the computation. Explain what data is used and how you obtain it

7.3.3 Explain the assigning of weight to each source of long term funds , using book value or market value. Comment on the suitability and challenges. - Select, give reasons and compute the WACC

8.0 Capital Structure (500 words)

8.1 Explain what is capital structure

8.2 Explain the tax advantage of debt finance 8.3 Critically evaluate the impact of debt finance on WACC

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