Category: Finance

LBO model assignment:
This individual assignment asks you to take a public firm’s financials and assess whether it makes a suitable LBO target. You will build an Excel file LBO model with a simple debt and equity structure. We have provided a blank version of one Download blank version of onethat has the required sections and the target historical financials (except for stock price). The goal of the exercise is to have you build all the connected parts of the model and determine whether the assumptions below, plus your own, result in a deal that exceeds our hurdle rate. You will evaluate Big5 Sporting Goods.
Questions to answer
What is your model’s expected IRR and MOIC? Does it exceed the 25% hurdle rate?
If it does, identify a change in the model’s financial forecasts that will generate a lower than 25% hurdle. Similarly, if it does not exceed the hurdle rate, adjust one of the income statement assumptions and discuss what is required to exceed 25%.
After working through the model, what are two diligence questions you would ask to the management team? The questions should be connected to parts of your model.
Deliverable
Excel file with calculations. Label the sections of your model clearly. See empty template for a reasonable starting point.
Add a sheet “Assumptions” that list what you view as key assumptions that you made in the model
Add a sheet “Answers” that address #1, #2, and #3 above
Model assumptions (some already coded into file)
The debt financing fee is 3.5% (no need to amortize, pay at close)
Control premium of the last 6 months of the traded share price of 20-25%
The revolver should not be needed and can be ignored (we will investigate those soon)
Debt to total deal value (%) in range with the last 2 years of PE deals (see slides)
A baseline model of forecasted financials that is grounded in the company’s history and incorporates some growth or new efficiencies
Select key drivers as a % of revenues.
Capex, depreciation, and NWC (as a function of current assets and liabilities) also work in this way.
No management rollover
Debt terms: See Excel template; Assume SOFR is fixed over the investment window
5-year holding period
Exit multiple that is equal to that implied by your control premium (make this clear in your Excel)
Big5 Sporting Goods specifics
Assume the deal year is the end of fiscal year 2022 (Jan 1) and you are using the Jan 2023 numbers.
See the CF statement for historical depreciation and amortization (D&A)
Assume that 50% of D&A is depreciation
Rough grading rubric:
Entry EV and equity value clear in the Excel
Defend the control premium
Sources and uses tables incorporate all the components and fees
Build out a simple income statement –> EBITDA and NI as outputs
Build out a simple schedule that tracks total debt balance over time
Calculate leveraged CF that provides the starting point for the debt repayment
Calculate the interest payments each year using the average balance of the debt; incorporate into the Income Statement (and thus Net Income)
The income statement and balance sheet drivers are clear and explained in your “Assumptions” sheet
Output a final debt level, cash balance, and equity
Calculate the IRR and MOIC of the deal

Struggling with where to start this assignment? Follow this guide to tackle your assignment easily!

Step 1: Understand the Assignment

This assignment requires you to analyze Big5 Sporting Goods as a potential Leveraged Buyout (LBO) target. You will build a financial model in Excel and assess whether the deal meets a 25% hurdle rate.

Step 2: Gather the Necessary Data

• Download the provided Excel template. This file includes key financial sections and historical data.
• Locate missing data. The stock price is missing—find and input the correct value.

Step 3: Build the Core Model

3.1 Set Up Entry Valuation

• Calculate Enterprise Value (EV) and Equity Value.
• Apply the control premium (20-25%). Justify your chosen premium.

3.2 Construct Sources & Uses Table

• Sources: Include debt and equity contributions.
• Uses: Capture purchase price, financing fees (3.5%), and other costs.

3.3 Develop Income Statement & Key Financial Drivers

• Forecast revenue growth and key drivers as a % of revenue.
• Account for CapEx, depreciation, and Net Working Capital changes.
• Build an EBITDA and Net Income calculation.

3.4 Model Debt & Cash Flows

• Debt Schedule: Track balance over time.
• Interest Expense: Calculate using the average debt balance.
• Leveraged Cash Flow: Determines ability to repay debt.

3.5 Exit Valuation

• Exit multiple = Control Premium multiple.
• Calculate final debt, cash, and equity values.
• Compute IRR and MOIC.

Step 4: Answer the Key Questions

Q1: Does the model exceed the 25% hurdle rate?

• Clearly state your IRR and MOIC.
• If yes, identify a factor that would reduce IRR below 25%.
• If no, adjust one assumption to exceed 25% and explain the change.

Q2: Adjusting the Model

• Modify one income statement assumption (e.g., revenue growth, margins).
• Observe how this impacts IRR and MOIC.

Q3: Due Diligence Questions

• Formulate two questions for management based on your model assumptions.

Step 5: Finalize Your Submission

• Check your Excel file: Ensure all sections are clearly labeled.
• Add an “Assumptions” sheet: Summarize key inputs.
• Add an “Answers” sheet: Address all required questions.
• Review for accuracy and completeness.

By following these steps, you’ll create a structured, well-supported LBO analysis that meets assignment requirements. Happy modeling!

Using the company that you chose in this week’s Discussion, develop a ratio analysis using the Mergent Database and Excel.
Create an Excel worksheet that lists all downloaded (+/- 20) financial ratios, the calculations, and the purpose of each ratio. (This is general, and not specific to your company’s performance.)
Include the following headings in your worksheet.
ave your worksheet.
If you have not already done so, follow the instructions in the Ratios section on page 4 of the Mergent Online Database Instructions.docx Open this document with ReadSpeaker docReader Download Mergent Online Database Instructions.docxOpen this document with ReadSpeaker docReaderto download the Ratios worksheet for your company.
For the ratio analysis, use the worksheet you created and the Ratios worksheet that you saved from Mergent.
How did your company perform over time in regard to the following ratios? (This is separate from above, and specific to your company’s performance.)
Current Ratio
Inventory Turnover – if your company does not have inventory, use Receivables Turnover or Accounts Payable Turnover
Total Debt to Equity
Return on Equity (ROE)
Book Value Per Share
Document your analysis on the Mergent Ratio Worksheet

Struggling with where to start this assignment? Follow this guide to tackle your assignment easily!

In this assignment, you’ll be conducting a ratio analysis for your chosen company using data from the Mergent Database and Excel. Here’s a clear, step-by-step guide to help you organize your work and complete the ratio analysis effectively.

Step 1: Download the Necessary Financial Data

• Access the Mergent Database: Begin by logging into the Mergent database using the instructions provided in the Mergent Online Database Instructions.docx file.
• Download the Ratios Worksheet: Follow the step-by-step instructions in the guide to download the financial data specific to your company, including the ratio worksheet.
• Gather Financial Statements: Download your company’s balance sheet, income statement, and other relevant financial data for the most recent years (at least two years).

Step 2: Set Up Your Excel Worksheet

Create a new Excel worksheet to organize your financial ratio analysis. Use the following headings to structure your sheet:

• Financial Ratios: List the names of the ratios you’ll be calculating.
• Formulas/Calculations: Provide the formulas to calculate each ratio.
• Purpose: Briefly describe what each ratio measures and why it’s important for financial analysis.
• Year 1: Input the values for the first year from the downloaded financial data.
• Year 2: Input the values for the second year.
• Year 3 (if available): Input the values for the third year (if available).

Step 3: List and Calculate Financial Ratios

Below is a general list of approximately 20 financial ratios that you can include in your Excel sheet. Each ratio will have a corresponding formula and purpose. You’ll need to calculate these ratios using the downloaded data for your company.

Key Ratios to Include (and their formulas):

1. Current Ratio
   Formula: Current Assets ÷ Current Liabilities
   Purpose: Measures the company’s ability to cover short-term liabilities with short-term assets. A ratio > 1 indicates good short-term financial health.
2. Quick Ratio (Acid Test)
   Formula: (Current Assets – Inventory) ÷ Current Liabilities
   Purpose: A more stringent measure of liquidity, as it excludes inventory, which may not be easily liquidated.
3. Inventory Turnover
   Formula: Cost of Goods Sold ÷ Average Inventory
   Purpose: Indicates how quickly the company is selling and replacing inventory. A higher turnover means efficient inventory management.
4. Receivables Turnover (Use if your company doesn’t have inventory)
   Formula: Net Credit Sales ÷ Average Accounts Receivable
   Purpose: Measures how often the company collects its average accounts receivable during a period. A higher number indicates effective credit management.
5. Accounts Payable Turnover (Alternative if Receivables is not applicable)
   Formula: Net Credit Purchases ÷ Average Accounts Payable
   Purpose: Shows how quickly the company pays its suppliers. A lower ratio could indicate slower payments, while a higher ratio shows faster payment.
6. Total Debt to Equity
   Formula: Total Debt ÷ Total Equity
   Purpose: Measures the company’s financial leverage, showing the ratio of debt to equity financing. A high ratio may suggest higher financial risk.
7. Debt to Total Assets
   Formula: Total Debt ÷ Total Assets
   Purpose: Indicates what portion of the company’s assets is financed by debt.
8. Gross Profit Margin
   Formula: (Sales – Cost of Goods Sold) ÷ Sales
   Purpose: Measures the percentage of revenue that exceeds the cost of goods sold, showing the efficiency of production.
9. Operating Profit Margin
   Formula: Operating Income ÷ Sales
   Purpose: Measures the percentage of profit a company makes from its operations before accounting for taxes and interest.
10. Net Profit Margin
    Formula: Net Income ÷ Sales
    Purpose: Indicates the overall profitability of the company, showing how much profit is made for every dollar of sales.
11. Return on Assets (ROA)
    Formula: Net Income ÷ Average Total Assets
    Purpose: Measures how efficiently the company uses its assets to generate profit.
12. Return on Equity (ROE)
    Formula: Net Income ÷ Average Shareholders’ Equity
    Purpose: Shows the return on shareholders’ investments, helping assess profitability in relation to equity.
13. Return on Investment (ROI)
    Formula: (Net Profit ÷ Cost of Investment) × 100
    Purpose: Measures the gain or loss generated relative to the investment’s cost.
14. Earnings Before Interest and Taxes (EBIT) Margin
    Formula: EBIT ÷ Sales
    Purpose: Measures the operating profitability of a company before interest and taxes are subtracted.
15. Interest Coverage Ratio
    Formula: EBIT ÷ Interest Expense
    Purpose: Measures the company’s ability to meet its interest obligations from its operating income.
16. Cash Conversion Cycle
    Formula: Days Inventory Outstanding + Days Sales Outstanding – Days Payable Outstanding
    Purpose: Measures the time it takes for the company to convert its inventory into cash.
17. Dividend Yield
    Formula: Dividends per Share ÷ Market Price per Share
    Purpose: Shows the return on investment through dividends for shareholders.
18. Price-to-Earnings (P/E) Ratio
    Formula: Market Price per Share ÷ Earnings per Share
    Purpose: Measures the price investors are willing to pay for each dollar of earnings, indicating market expectations for growth.
19. Price-to-Book (P/B) Ratio
    Formula: Market Price per Share ÷ Book Value per Share
    Purpose: Compares the market value to the book value, showing how much investors are willing to pay for each dollar of net assets.
20. Dividend Payout Ratio
    Formula: Dividends ÷ Net Income
    Purpose: Shows the proportion of earnings that are paid out as dividends, indicating how much profit is retained for reinvestment.

Step 4: Analyze Your Company’s Performance

Now, using the ratios from the Mergent database and your Excel worksheet, evaluate your company’s performance over time:

• Current Ratio: Determine if your company has sufficient short-term assets to cover its liabilities.
• Inventory Turnover or Receivables Turnover: Examine how well the company is managing its inventory or receivables (depending on what data is available).
• Total Debt to Equity: Evaluate the company’s financial risk based on its debt level in comparison to equity.

For each of these ratios, note any significant trends or shifts between years. Are there any improvements or declines in performance? Use the data from Mergent to compare year-over-year changes.

Step 5: Prepare Your Written Analysis

In your written analysis, make sure to:

• Summarize the key ratios for your company, focusing on the current ratio, inventory/receivables turnover, and debt-to-equity ratio.
• Analyze the trends in these ratios over time. Are there any concerning fluctuations, or is the company improving its performance in any areas?
• Interpret the results in the context of the company’s overall financial health. How do these ratios relate to industry standards or competitor performance?

Step 6: Review and Submit

Once you’ve completed your ratio analysis and written summary, review your work to ensure it meets all assignment requirements:

• Ensure that your Excel worksheet is properly formatted and that each ratio has its calculation and purpose clearly stated.
• Proofread your written analysis for clarity and accuracy.
• Submit the Excel worksheet along with your written analysis.

By following these steps, you’ll be able to complete a comprehensive ratio analysis of your company, which will help you evaluate its financial health and performance effectively. Good luck!

sing the company that you chose in this week’s Discussion, develop a company trend and common-size analysis using the Mergent Database Links to an external site. and Excel.
Download the company’s financial statements.
Download the Mergent Online Database Instructions .docx .Open this document with ReadSpeaker docReader Download Mergent Online Database Instructions.docx.Open this document with Read Speaker doc Reader
Follow the step-by-step instructions in the Mergent Online Database Instructions document to select your company and download their financial statements from the Mergent Online database.
Review Horizontal and Vertical Analysis for Balance Sheet and Income Statement.
Download and complete the steps on the Module 1 Assignment 1 – Company Financial Analysis – Part 1 – Balance Sheet (Horizontal Analysis) Download Module 1 Assignment 1 – Company Financial Analysis – Part 1 – Balance Sheet (Horizontal Analysis)Open this document with ReadSpeaker docReader document. Use your company’s two most recent sets of years (three years total), as the example is dated.
Remember that Horizontal analysis is used to evaluate trends in the financial condition of an organization.
Download and complete the steps on the Module 1 Assignment 1 – Company Financial Analysis – Part 1 – Income Statement (Vertical Analysis) Download Module 1 Assignment 1 – Company Financial Analysis – Part 1 – Income Statement (Vertical Analysis)Open this document with ReadSpeaker docReader document. Use your company’s two most recent years, as the example is dated.
Remember that Vertical analysis is used to detect items that are out of line, that deviate from a predetermined amount, or that are indicative of other problems.
Perform the Horizontal and Vertical Analysis of the Balance Sheet and Income Statement and Prepare a Written Analysis, answering all assigned questions in the respective downloaded financial statement, not an alternative document.
For the Statement of Cash Flows, you will analyze the information presented in the Statement.
Obtain the Statement of Cash Flows that you saved from Mergent.
The Statement of Cash Flows is broken out into three areas: Operating Activities, Investing Activities, and Financing Activities.
How did your company’s use of cash differ in operating activities from year-to-year?
What are the sources and uses of cash in both investing and financing activities?
Do not submit alternative documents, only the downloaded financial statements. Answer the assigned questions in the respective downloaded financial statement. Three attachments in one submission is required. If you have any questions, please ask your professor.

Struggling with where to start this assignment? Follow this guide to tackle your assignment easily!

This assignment requires a deep dive into a company’s financial performance through horizontal and vertical analysis, as well as a review of its cash flow statement. Here’s a step-by-step guide to help you organize your work and ensure you’re addressing all components correctly:

Step 1: Select Your Company

Begin by choosing the company you’ll analyze. If you’ve already selected the company in this week’s discussion, then you’re off to a good start!

Step 2: Access Mergent Database and Download Financial Statements

• Download the Mergent Online Database Instructions: Follow the instructions in the provided Mergent Online Database Instructions.docx file to locate your chosen company within the Mergent database.
• Download the Company’s Financial Statements: Once you’ve located your company, download the relevant financial data, which should include the balance sheet, income statement, and statement of cash flows for the most recent years available. Make sure to get data for the two most recent years and, if possible, three years total (as instructed).

Step 3: Review Horizontal and Vertical Analysis for Balance Sheet and Income Statement

• Horizontal Analysis of Balance Sheet: This type of analysis will help you evaluate the trend in the company’s financial condition. Focus on how the financial figures have changed over time, especially between the two most recent years.
  • Download the Module 1 Assignment 1 – Company Financial Analysis – Part 1 – Balance Sheet (Horizontal Analysis) document.
  • Complete the analysis by calculating the percentage change in the balance sheet figures from one year to the next.
• Vertical Analysis of Income Statement: Vertical analysis compares each item on the income statement as a percentage of total revenue (or sales). This will help you detect any unusual trends or deviations in expense ratios.
  • Download the Module 1 Assignment 1 – Company Financial Analysis – Part 1 – Income Statement (Vertical Analysis) document.
  • Complete the vertical analysis for the income statement using the provided template.

Step 4: Perform the Horizontal and Vertical Analysis of the Financial Statements

For each of the downloaded financial statement documents (balance sheet and income statement):

• Balance Sheet (Horizontal Analysis): Calculate the year-over-year changes for key figures such as assets, liabilities, and equity.
• Income Statement (Vertical Analysis): For each line item (revenues, costs, expenses, etc.), calculate what percentage they represent of total revenue.

Step 5: Analyze the Statement of Cash Flows

The statement of cash flows is divided into three main sections: Operating Activities, Investing Activities, and Financing Activities.

• Operating Activities: Look at how the company’s use of cash has changed year to year in this section. Has it been increasing or decreasing? Consider whether the company is generating cash from operations effectively.
• Investing Activities: Identify the sources and uses of cash related to investments. Has the company been acquiring or selling assets? Are they investing in long-term growth or liquidating assets?
• Financing Activities: Understand how the company is raising capital or paying down debt. Have they issued new stock, borrowed funds, or repaid debt? Look for trends in how the company is managing its financial obligations.

Step 6: Complete the Written Analysis

Once you’ve done the calculations and analysis, it’s time to answer the assigned questions within the downloaded financial statements:

1. Horizontal Analysis of the Balance Sheet: Answer the questions regarding trends and changes in the company’s financial position.
2. Vertical Analysis of the Income Statement: Address any deviations or out-of-line figures that might indicate a financial issue.
3. Cash Flow Analysis: Answer the following questions for the statement of cash flows:
   • How did your company’s use of cash differ in operating activities from year-to-year?
   • What are the sources and uses of cash in both investing and financing activities?

Note: Be sure to answer all questions within the respective downloaded financial statements rather than in a separate document.

Step 7: Review and Edit Your Analysis

Once you’ve completed the analyses and written responses:

• Check Formatting: Make sure your analysis is clearly structured, following the template and ensuring clarity in your answers.
• Proofread: Double-check for spelling, grammar, or calculation errors. Ensure your analysis flows logically and that each section of the assignment is addressed.

Step 8: Submit the Required Documents

Once you’re confident that you’ve answered all the questions:

• Submit the three required documents (the balance sheet horizontal analysis, income statement vertical analysis, and cash flow analysis).
• Ensure that your submission only includes the downloaded financial statements and analysis, as specified.

By following this guide, you’ll be able to organize your analysis systematically and tackle your financial assignment with ease. Good luck!

attached are the book pages. please answer all questions. Week 6 Homework (50 points)
(10 pts) What is the difference between form of payment and financing? Name three examples of each.
(5 pts) Why might the seller prefer to be paid in stock and the buyer prefer to pay in cash?
(10 pts) According to your text, “Share-for-share deals yielded average excess returns of +14.5 percent to investors, while cash deals yielded +90.1 percent.” Why does form of payment make such a big difference in returns to shareholders? Name each reason and explain each one.
(10 pts) On page 577 in your text, a hostile tender offer of IBM to Lotus Corp using a “preemptive strategy” is presented. Discuss what might have happened—in detail—if IBM had offered a standard 30% acquisition premium instead of the 100% acquisition premium.
(10 pts) On page 693 of your text, it states, “In Basic Inc. v. Levinson, the Court said that the materiality of the news and the resulting obligation to disclose will depend on: 1) significance of the transaction to the company, and 2) probability of the transaction occurring.”Explain what this means.
Explain how a Toehold purchase disclosure protects investors.
Explain what disclosures are required to antitrust regulators.

(5 pts) Proper grammar, full sentences, correct spelling and punctuation, and a neat and professional format with clearly labeled answers are required.

– Market Segment (3 Slides)
a. Identify the industry the company is in
b. Identify the company’s position in the market
c. Identify the company’s competitors
– Financials (Review Annual Report) (4 Slides)
a. Give a two year summary of the company’s sales
b. Give a two year summary of the stock position (up/down) and why?
c. Identify dividends (do they give dividends; if so, has the amount gone up/down and why?
– Conclusions (4 Slides)
a. Explain your thoughts on where the company can grow and state any recommendations
1. How to increase sales & profits
2. Improve cash flows (Changing inventory practices/Cash Conversion Cycle)
3. Gain market share
4. Add additional financial considerations you have learned from this course.
Cite Sources (1 Slide)

– Market Segment (3 Slides)
a. Identify the industry the company is in
b. Identify the company’s position in the market
c. Identify the company’s competitors
– Financials (Review Annual Report) (4 Slides)
a. Give a two year summary of the company’s sales
b. Give a two year summary of the stock position (up/down) and why?
c. Identify dividends (do they give dividends; if so, has the amount gone up/down and why?
– Conclusions (4 Slides)
a. Explain your thoughts on where the company can grow and state any recommendations
1. How to increase sales & profits
2. Improve cash flows (Changing inventory practices/Cash Conversion Cycle)
3. Gain market share
4. Add additional financial considerations you have learned from this course.
Cite Sources (1 Slide)

The research paper should be centered on the ‘gold paradox’ as discussed in the two PDF documents, specifically analyzing the beta component of the CAPM. You can find detailed instructions in the Word document, within the ‘assessment’ section. Additionally, I have included the first part of the final assignment (LZ) for your reference. Please ensure that both a table of contents and a references list are included in the submission

the essay needs to be 750 – 900 words. it needs at least 5 references from the APUS library. I’ve attached the outline and references from the APUS library.

: THE GLOBAL IMPACT OF OPEN BANKING POLICIES
INHOUD
**Introduction:**
In recent years, Open Banking (OB) has emerged as a transformative force in the financial industry, present in approximately 80 countries worldwide. This proposal outlines the research for a master′s thesis aimed at comprehensively examining the rise of OB, its implications for the banking sector.
**Research Objectives:**
1. To analyze the global adoption and impact of Open Banking policies across different countries.
2. To investigate how Open Banking policies influence incumbent banks′ decisions to share customer data and adopt new technologies.
3. To assess the relationship between Open Banking policies and funding.
4. To explore the heterogeneity in the timing, purpose, and implementation of Open Banking policies and its impact on economic activity.
5. To evaluate the consequences of Open Banking on the financial ecosystem, including its effects on banks, fintechs, and consumers.
**Research Methodology:**
The research will involve a combination of data collection, econometric analysis, and theoretical modeling:
1. **Data Collection:** A hand-collected dataset of Open Banking policies from around the world will be compiled. Additionally, data on associated economic activities will be gathered.
2. **Econometric Analysis:** Statistical techniques will be employed to examine the causal relationship between Open Banking policies and various outcomes, such as fintech funding and the adoption of data-sharing technologies by incumbent banks.
3. **Literature Review:** A theoretical framework will be developed from the literature to model data use and sharing, with a focus on its impact on market entry, adverse selection, and product quality.
**Expected Contributions:**
This master′s thesis aims to make several contributions:
1. Provide a comprehensive analysis of the global landscape of Open Banking policies and their evolution.
2. Offer insights into the drivers and consequences of incumbent banks′ adoption of data-sharing technologies in response to Open Banking policies.
3. Assess the impact of Open Banking on fintech innovation and funding, shedding light on the dynamics of the fintech ecosystem.
4. Develop a theoretical framework that contributes to understanding the implications of Open Banking for market structure, data ownership, and consumer welfare.
**Conclusion:**
The rise of Open Banking policies is reshaping the financial industry, with implications for banks, fintechs, and consumers. This research will offer a nuanced understanding of how these policies are impacting financial markets globally and contribute to ongoing discussions about data ownership, market power, and innovation in the data-driven economy. By addressing these critical questions, the research aims to inform policymakers and industry stakeholders as they navigate the evolving landscape of banking regulation and technology-driven financial services.

Based on this, need a well-conceived and detailed table of contents with a logical design, as well as an introduction at the end of the table of contents and Chapter 2, Theoretical Background. I can write the rest myself. The required literature is books and scientific journals, and other “papers” should be avoided as much as possible.