FINANCE AND QUALITATIVE METHOD

Dick Smith Holdings (DSH) went into voluntary administration in January 2016.

In the second half of 2015, many shareholders began to lose confidence in the business and there was a steady sell-off of shares, sometimes with considerable volumes of sales and reduction in share price as large investors sold major holdings (see below).

Source: ASX, Feb 2016

Administrators are now trying to find a buyer for the business as a going concern.

Your assignment is to:

• Research and analyse the share price history of DSH from its launch to the date of administration;

• Estimate the β (beta) for DSH using data from its launch on the ASX in 2013 to June 30 2015.

• Discuss whether there were any warning signs emerging from the company's published statements and data about impending cash flow problems.

• Estimate the current value of the DSH business as a going concern.

• Discuss how a potential buyer could and should structure the capital required to make the purchase and ensure the future, including a discussion of the cost of this capital.