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business valuation studies 代寫

     
    There are some main ratios of relative valuation will be compared between companies for making value judgments.
    business valuation studies  代寫
    From profitability ratios aspect, gross margin is used to calculate profits based on a total sale. AGT had the gross profit margin about 67.57%. It means that 67.57% of the sales was their profit in 2012. Compared with other companies, SHFL ENTERTAINMENT INC’s gross profit margin was 63.75%,WMS INDUSTRIES INC was 62.20% and BYI was 62.91%. While such as BERJAYA LAND BHD, it only had 31.74% profits in the sales. In the same industries, like software product industries,the gross margin can be over than 80% in many cases. Due to these companies are both game industries, they can use the gross margin to directly compare their profit percentage in the sales revenues.
     business valuation studies  代寫
    When comes to ROE a ratio, in many profitability ratios, ROE is the best measurement way to the companies in the same industries.
    ROE can measure the return of the shareholders’ equity and also can help investors to consider whether the firm is efficiency when the companies generate benefits.
    We can see from the table, ROE of AGT LT was 64.21% in 2012 and it was the largest ration than others. Next was BALLY TECHNOLOGIES INC had 49.46% and the smallest value was 1.31%.
    ROE shows how well a company uses investment funds to generate earnings growth. So we can think the AGT had the highest return to their shareholders and lowest return to shareholders was BERJAYA LAND BHD in 2012. But the high ROE have no instant benefit to shareholders. We should know the range of ROE is 15% to 20% and it is usually considered good. 
     business valuation studies  代寫
    About ROA ratio, it shows that how the companies make profit from their assets.
    The return on assets percentage is a useful measurement when comparing the competing companies in the same industry because the ratios will vary widely in different industries. The lower ROA need more initial investment than companies with higher ROA.
    We can get a clear show that the highest ROA was 42.1% in AGT in 2012. The lowest point of ROA was 4.15% in ECHO ENTERTAINMENT GROUP LTD. So when the ECHO ENTERTAINMENT GROUP needs more investment or fund initially than AGT and this is disadvantage in the competitive market.
     
     
    P/E ratio
    According to P/E ratios of these companies, in 2012, TATTS GROUP LTD was 13.78%, SANKYO CO LTD was 16.38% and AINSWORTH GAME TECHNOLOGY was 16%. They both have the fair value on stock valuation. While AINSWORTH GAME TECHNOLOGY will get the P/E ratio is 25.67% in 2013, when a company owns a very high P/E that over 25%, it means that they may have high-expected growth on earnings, or the earnings may be viewed to be low in this year. Due to these reasons, the shares of AINSWORTH GAME TECHNOLOGY are viewed that more risky and lead to decrease investment by investors. Similarly, WMS INDUSTRIES INC, BERJAYA LAND BHD, SANKYO CO LTD and SEGA SAMMY HOLDINGS INC both have higher P/E ratios.
     business valuation studies  代寫
    For P/B ratios, we can find the P/B ratio of AINSWORTH GAME TECHNOLOGY was 7.33% in 2012;INTL GAME TECHNOLOGY (IGT) was 8.52%. There were also some opposite cases,for example,WMS INDUSTRIES INC P/B ratio was 48.54%, BALLY TECHNOLOGIES INC (27.06%) and CROWN LTD (20.07%). They all owned the higher P/B ratios in 2012.
     
    When face with a higher P/B ratios, investors expect their investment the companies that can produce more value to a given assets by efficient management. P/B ratio also provides some advices to investors that whether they should pay too much for the business based on P/B ratio. Investors will choose invest the companies with lower P/E ratios. Such as TABCORP HOLDINGS LTD (0.22%),ARISTOCRAT LEISURE LTD (0.07%),UNIVERSAL ENTERTAINMENT CORP (1.11%).
    However, P/B ratio cannot directly provide any information or data to investors about the company’s ability to generate profits or cash for shareholders.
     
    When comes to the PEG ratio, it is a way of valuation metric for showing the relative relationship between the stock price, and the expected growth of the company. To be specific, the is higher for a business so the company also has a higher growth rate. Because of this reason, investors more likely to invest the company with the lower PEG ratio and it means that the relationship is better than the higher PEG ratio. A lower ratio is cheaper but a higher ratio is expensive.
    When the PEG ratio is 1, we can think there is a fair trade-off between the values of cost and growth of stocks,it explains that a stock is reasonably valued on given the expected growth. If the companies have PEG ratios is between 0 to 1, we can think the stocks of these companies will offer higher returns.
    From the table data, we can find AGI’s PEG ratio was 1.13 and over 1. While IGT Company had 0.94 of PEG ratio below PEG company. So IGT Company had an advantage than AGI Company for the higher returns to shareholders. ARISTOCRAT LEISURE LTD had the same PEG ratio is 1.13 with AGI Company in 2012.
     
    Now we need give a detailed introduction to based multiples. There are some certain main multiples such as EV/EBITDA. It is useful to compare valuations of minority interests for the businesses that have significant differences in capital structures.
    Firstly, we explain the main multiple is EV/ /EBITDA. When investors consider the finance of the targeted company by measuring the value of a company, they can use the EV/ /EBITDA. The is a method to measure the of a company. But the EV/ /EBITDA, it is widely used as a valuation multiple that based on not market value. Due to EV/ /EBITDA is -neutral, it also can directly compare companies that have different levels of debt.
    On the one hand, the EV/EBITDA requires pay more attention on using it for comparing the companies if some companies with the low profit margins. Because we must make sure the businesses have legitimate profitability before evaluating the EBITDA, and the low profit margins may not ensure the EBITDA is accurate. On the other hand, the average EV/EBITDA multiple of an industry also need be calculated and offer the comparison to the company of interest.
    We could get the lower EV/EBITDA multiple compared with the average of EV/EBITDA (9.2%) of these targeted companies. For example, SANKYO CO LTD was 2.62 and DYNAM JAPAN HOLDINGS CO LTD was 1.92.
    So the AGT Company was valued the biggest and the lowest enterprise value was DYNAM JAPAN HOLDINGS CO LTD in 2012.
     
     
    1.      By above these companies compared with AGT, I think the IGT Company provides the best comparison to AGT. The market ratios and profitability ratios can offer many financial ratios to companies in the same industries. When compared with AGT on same ratios, the IGT gives all related financial ratios. Advantages of relative valuation that can offer the accurate information. These data was generated from the financial statements of companies so the information is accurate. It is important purpose for companies to compare companies in different size, companies in different industries or comparing a single business in different period. For investors, they can get the direct and simple information from financial ratios and make a reasonable decision to invest or not.  Although financial ratios are useful to individual or organizations, disadvantages of ratios will influence the final decision. On the one hand, Because of many uncertain elements will impact on companies, when comparing the businesses cannot ignore them. More specific, such as the regulation, market structures and so on, these uncertain environment elements all can change the companies’ development. But financial ratios do not consider these special conditions. On the other hand, most financial ratios explain the past financial condition while investors and shareholders more focus on the current and future companies’ finance.
     
    2. The profitability ratios are appropriate for this case, because these companies in the same industries. For example, ROA and ROE ratios are useful to compare companies in the same industry.
    Profitability ratio is easily to use for comparing businesses and make investors can directly understand this information. When measure the sales and investments of companies, profitability ratios can help investors to know whether the efficiencies of a business and as well as improve management by owners to take corrective actions.  In the inter environment of businesses, profitability ratios can communicate about the final goal in a business based on financial analysis. Because making profits as the final goals of companies, most businesses must remain a going concern by increasing the profit.
     
     
    3. Enterprise value is the all value of a company in economy.
    .business valuation studies  代寫
    Market capital+ total debt- cash= Enterprise value
    According to the above formula, theenterprise value of INTL GAME TECHNOLOGY (IGT)was 5,812.81AUm.
     
     
     
     
    In my view, I think most appropriate in this situation is intrinsic valuation. Although mostly use the relative valuation, firstly we must understand the relative valuation depend on the accurate comparisons of two companies’ profits, risk, and market factors. In the second, if the businesses want to use the relative valuation as their benchmark, it may cause badly misprice. According to the data in Exhibit 6, these data are only the current and future financial figures of AGT, so there is no comparison with others. And also these information and figure mostly based on current and future while not previous finance. So I think intrinsic valuation should be used in Exhibit 6.
     
     
     
     
     
     
     
     
     
     
     
     
     
    References
    1.      Thomason, k (2008), Advantages & Disadvantages of Net Present Value in Project Selection.
    2.      Williams, Jan R.; Susan F. Haka, Mark S. Bettner, Joseph V. Carcello (2008). Financial & Managerial Accounting. McGraw-Hill Irwin.
    3.      Weston, J. (1990). Essentials of Managerial Finance. Hinsdale: Dryden Press.
    4. Weygandt, J. J., Kieso, D. E., &Kell, W. G. (1996). Accounting Principles (4th ed.). New York, Chichester, Brisbane, Toronto, Singapore: John Wiley & Sons, Inc.
     

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