Corporate Financial Management
Selected Pearson plc company and stock for analysis.
Select a multinational company of your choice from the FTSE 100 index. Use the "Investor Relations" section of the website to download annual statements covering the most recent 5 year period. The report structure should be as follows:
Question 1. Evaluate and discuss the financial performance of the company over the period of analysis. As a minimum you must cover the following:
a. General review of the income statements
b. Working capital management policy
c. Dividend policy
d. Historical share price performance
Question 2. Estimate the share price of the company by means of the Dividend Discount and the Capital Asset Pricing models. For this task use the sensitivity analysis in relation to the variables which are hard to predict and/or accurately estimate. Relate the obtained result to the market estimate of the share price and comment on the reasons behind possible differences citing relevant theories.
Question 3. Discuss the capital structure of the company using the company's balance sheet in the context of the Modigliani and Miller theories on capital structure and prepare a constructive critique of these theories. Your discussion should involve various balance sheetitems such total equity, total debt, and other relevant information.