1 Size-up HCM using historical ratio analysis and a discussion of its business risk and financial risk.

The Q1 tab reproduces HCM's financial statements and forecasts for your convenience.

2 Value the business from Mr. Thompson's (the owner) viewpoint, explaining fully.

Cost of capital and valuation templates are provided for your convenience.

3 Value the business from the potential buyer's (Great Wall) viewpoint, considering the changes that it will make, explaining fully.

The changes it would make will change the cash flows.

4 Should Mr. Thompson consider liquidating HCM instead of selling it? Defend your position.

5 As Haiping Sun, make a recommendation to the client Great Wall, about how much it should pay for HCM, explaining fully.

6 If HCM is sold at the price you recommend, calculate Mr. Thompson's IRR since buying the business in 1987, or, explain why it is not possible to do the calculation).

7 As Haiping Sun, explain how Great Wall might structure the transaction, i.e., how can they raise the money to buy HCM?

The Financing template is provided for your convenience.

8 Is HCM a target for a leveraged buyout? Explain your position based on calculating HCM's debt capacity? See further instructions on the Q7-8 tab.

Download:- Size-up HCM using historical ratio analysis.xlsx