Financial Position Analysis

In this assignment, you will write a paper in which you will analyze an income statement, identify risks, and identify funding choices for a business that is expanding globally.

Scenario:

Your employer, Getting Bigger All The Time, Inc. (GBATT), a multinational corporation headquartered in the United States of America, is looking to expand operations into Brazil. GBATT manufacturers a variety of materials used in the residential and commercial building industries. The Brazilian economy has continued to expand, even in the current global economic downturn, and sales of GBATT materials to Brazilian companies have greatly increased. GBATT is exploring the possibility of building a new manufacturing facility in Brazil, not only to meet the increasing Brazilian demand, but also in anticipation of increased demand in other South American and Latin American countries once the global recession is completely over.

The following is GBATT’s basic income statement for the last two years of operations.

GBATT Income Statement for Years Ending December 31 ($ millions)

Year 1

Year 2

Amount

% of total sales

Amount

% of total sales

Net Sales

$4,500.0

100.0%

$4,300.0

100.0%

Variable operating costs (78% of sales)

(3,510.0)

78.0%

(3,354.0)

78.0%

Gross profit

990.0

22.0%

946.0

22.0%

Fixed operating costs except depreciation

(60.0)

1.3%

(57.0)

1.3%

Earnings before interest, taxes, depreciation,
and amortization (EBITDA)

930.0

20.7%

889.0

20.7%

Depreciation

(33.0)

0.7%

(30.0)

0.7%

Earnings before interest and taxes (EBIT)

897.0

19.9%

859.0

20.0%

Interest

(24.0)

0.5%

(23.0)

0.5%

Earnings before taxes (EBT)

873.0

19.4%

836.0

19.4%

Taxes (35%)

(305.6)

6.8%

(292.6)

6.8%

Net income

$567.5

12.6%

$543.4

12.6%

Directions:

The CFO has asked you to analyze the information to help the decision makers select among different options. He asked that your analysis include the following topics:

Operational Performance: Write a brief analysis of GBATT’s operational performance. Include discussion of the year over year performance.
Financial Markets and Funding Choices: Analyze the choices of funding for the new plant. Your analysis should include:
Debt Financing
Compare currency denomination choices for debt, and if debt is selected for financing suggest whether the debt should be denominated in U.S. dollars or Brazilian reals.
Compare centralized and decentralized denomination of debt and its effect on the debt issuance.
Determine if a fixed or a floating debt rate should be used.
Equity Financing: Examine whether equity should be domestically listed in a single exchange, or cross-listed in multiple exchanges around the world. What are some advantages and disadvantages of each?
Write a 6–7-page paper listing your findings. Make sure you write in a clear, concise, and organized manner; demonstrate ethical scholarship in accurate representation and attribution of sources; and display accurate spelling, grammar, and punctuation. Apply APA standards to citation of sources.

Use the following file naming convention: LastnameFirstInitial_M3_A2.doc. For example, if your name is John Smith, your document will be named SmithJ_M3_A2.doc.

By Wednesday, May 25, 2016, deliver your assignment to the M3: Assignment 2 RA 1 Dropbox.

Grading Criteria

Grading CriteriaProficientMaximum Points

Write a brief analysis of GBATT’s operational performance. Include discussion of the year over year performance.

Analysis is complete, accurate, and specific. Analysis includes discussion of the year over year performance of GBATT.

60

Compare currency denomination choices for debt, and if debt is selected for financing suggest whether the debt should be denominated in the accurate currency.

Comparison is accurate and appropriate. Suggestion of which denomination is more appropriate is included.

28

Compare centralized and decentralized denomination of debt and how it affects the debt issuance.

Comparison is accurate and appropriate. An accurate effect of the debt issuance is included in the comparison.

32

Determine if a fixed or a floating debt rate should be used.

Analysis is accurate and justified.

28

Examine whether equity should be domestically listed in a single exchange, or cross listed in multiple exchanges around the world. What are some advantages and disadvantages of each?

Examination is accurate, specific, and clear. Advantages and disadvantages identified for listing equity in various exchanges are clear and appropriate.

32Writing Standards

Write in a clear, concise, and organized manner; demonstrate ethical scholarship in accurate representation and attribution of sources (i.e. APA); and display accurate spelling, grammar, and punctuation.

Wrote in a clear, concise, and organized manner; demonstrated ethical scholarship in accurate representation and attribution of sources; and displayed accurate spelling, grammar, and punctuation.

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our Guarantees

Money-back Guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism Guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision Policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy Policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation Guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more
error: