Growth and Merger/Acquisition Analysis -
Determine two growth strategies for the selected company (one strategy shows organic growth, the other shows merger or acquisition).
Prepare financial projections using eVal for the two growth strategies that you developed.
Then, prepare a written analysis and recommendation for the growth strategy that you recommend for the Selected Company and defend the recommendation.
Refer to the detailed instructions below for the assignment.
MAKE SURE THAT YOU SUBMIT THE EVAL VALUATION FILES (ORGANIC & MERGER/ACQUISITION) WITH THEASSIGNMENT
Growth Analysis - Organic &Merger/Acquisition
Using the company selected for the assignments, determine two growth strategies for the selected company (one strategy shows organic growth, the other shows merger or acquisition).
Prepare financial projections using eVal for the two growth strategies. The projections need to show the results of company operations following implementation of each strategy.
Then, prepare a written analysis and recommendation for the growth strategy that is recommended for the selected company and defend the recommendation.
The assumptions used in No. 1 and No. 2 below must be summarized in a format that is identical to the example provided below.
The analysis needs to include:
1. Explanation and Analysis of Assumptions and Results of eVal Projections for Organic Growth Strategy - Explain the assumptions that are used in the projections. Discuss the results of the organic growth strategy along with its strengths and weaknesses.
2. Explanation and Analysis of Assumptions and Results of eVal Projections for Merger or Acquisition Growth Strategy - Explain the assumptions that are used in the projections. Discuss the results of the merger/acquisition growth strategy along with its strengths and weaknesses.
3. Examination and Discussion of Comparison of Results of the Growth Strategies - Compare and discuss the two growth strategies. This analysis should include an examination of the comparative strengths and weaknesses of the strategies.
4. Recommendation and Justification of Most Appropriate Growth Strategy - Recommend and justify which growth strategy is most appropriate for the company.
Writing Instructions
The discussion portion of the analysis should be three to five pages in length, double spaced, and should employ APA style and format for reference citations. Supporting data (e.g., figures, tables, etc.) and references should be submitted limited to four separate attachments in an appendix after the written portion of the paper.
The paper should begin with a short introduction and then proceed to examine the four topics outlined in the previous section.
The subheadings used in the paper should be:
1. Introduction
2. Explanation and Analysis of Assumptions and Results of eVal Projections for Organic Growth Strategy
3. Explanation and Analysis of Assumptions and Results of eVal Projections for Merger or Acquisition Growth Strategy
4. Examination and Discussion of Comparison of Results of the Growth Strategies
5. Recommendation and Justification of Most Appropriate Growth Strategy
Evaluation: 12.5% of final course grade.
Completeness of analysis: The analysis must demonstrate a solid understanding of capital budgeting and the analysis of corporate investments. All assumptions used in preparing the projections for the project need to be thoroughly explained.
Organization: The paper should be well-organized and follow a logical pattern of analysis and discussion.
Presentation: Papers should meet professional business standards and meet APA formatting requirements.
Spelling, punctuation, and grammar: There should be few errors in grammar and punctuation. All sentences must be complete and well-structured.
Submission and Format:The completed paper is to be submitted to the "Gradebook" location designated for the assignment. The paper must be in Word format otherwise no credit is earned for the assignment. The eVal model is to be submitted.
The paper is also to be submitted to the Online Classroom. This will allow students to examine and discuss the various projects.
Table 1
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eVal Assumptions for
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Organic Growth & Merger / Acquisition Strategies
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Company Name
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McCorm ick & Co., Inc.
|
|
|
Current Year
|
Forecast
Organic
Growth
|
Forecast
Merger/
Acquisition
|
Explanation of Assumptions
|
|
Income Statement Assumptions
|
|
|
|
|
|
Sales Growth
|
3.%
|
3.%
|
3.%
|
|
|
Cost of Goods Sold/Sales
|
57.%
|
57.%
|
57.%
|
|
|
R&D/Sales
|
2.%
|
2.%
|
2.%
|
|
|
SG&A/Sales
|
25.%
|
25.%
|
25.%
|
|
|
Dep&Amort/Avge PP&E and Intang.
|
3A%
|
3A%
|
3A%
|
|
|
Net Interest Expense/Avge Net Debt
|
4.%
|
4.%
|
4.%
|
|
|
Non-Operating Income/Sales
|
0.6%
|
0.6%
|
0.6%
|
|
|
Effective Tax Rate
|
25.%
|
25.%
|
25.%
|
|
|
Minority Interest/After Tax Income
|
-19.%
|
-19.%
|
-19.%
|
|
|
Other Income/Sales
|
0.0%
|
0.0%
|
0.0%
|
|
|
Ext. Items & Disc. 0 ps./Sales
|
0.0%
|
0.0%
|
0.0%
|
|
|
Pref. Dividends/Avge Pref. Stock
|
0.0%
|
0.0%
|
0.0%
|
|
|
Balance Sheet Assumptions
|
|
|
|
|
|
Working Capital Assumptions
|
|
|
|
|
|
Ending Operating Cash/Sales
|
2.%
|
2.%
|
2.%
|
|
|
Ending Receivables/Sales
|
12.%
|
12.%
|
12.%
|
|
|
Ending Inventories/COGS
|
29.%
|
29.%
|
29.%
|
|
|
Ending Other Current Assets/Sales
|
3.%
|
3.%
|
3.%
|
|
|
Ending Accounts Payable/COGS
|
15.%
|
15.%
|
15.%
|
|
|
Ending Taxes Payable/Sales
|
0.0%
|
0.0%
|
0.0%
|
|
|
Ending Other Current Liabs/Sales
|
-18.%
|
-18.%
|
-18.%
|
|
|
Other Operating Asset Assumptions
|
|
|
|
|
|
Ending Net PP&E/Sales
|
14.%
|
14.%
|
14.%
|
|
|
Ending Investments/Sales
|
6.%
|
6.%
|
6.%
|
|
|
Ending Intangibles/Sales
|
48.%
|
48.%
|
48.%
|
|
|
Ending Other Assets/Sales
|
2.%
|
2.%
|
2.%
|
|
|
Other Operating Liability Assumptions
|
|
|
|
|
|
Other Liabilities/Sales
|
9.%
|
9.%
|
9.%
|
|
|
Deferred Taxes/Sales
|
3.%
|
3.%
|
3.%
|
|
|
Financing Assumptions
|
|
|
|
|
|
Current Debt/Total Assets
|
6.%
|
6.%
|
6.%
|
|
|
Long-Term Debt/Total Assets
|
23.%
|
23.%
|
23.%
|
|
|
Minority Interest/Total Assets
|
0.4%
|
0.4%
|
0.4%
|
|
|
Preferred Stock/Total Assets
|
0.0%
|
0.0%
|
0.0%
|
|
|
Dividend Payout Ratio
|
44.%
|
44.%
|
44.%
|
|