Corporate

Corporate Finance | 25765

Case Study Guideline

CASE STUDY: CAPITAL STRUCTURE ANALYSIS

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The investment bank your group works for has been hired by the Board of Directors of the company assigned to your group to perform analyses of the company’s capital structure and to provide advice on whether the current capital structure is optimal.

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Since, your group will report directly to the Board of Directors, you can assume Financial Management level knowledge of finance, i.e., you can assume that your readers would be familiar with Modigliani and Miller (MM) theorem with corporate taxes. The report should therefore cover material more advanced than MM with corporate taxes.

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You should thoroughly read lectures 7 through 9, the relevant textbook chapters, and pp. 1-34 of the survey, “The Theory and Practice of Capital Structure”, by Henri Servaes and Peter Tufano (available on UTSOnline) to gain the background necessary to undertake the project.

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Your group’s assigned task is to produce a report on the capital structure of the company assigned to your group. In the report, you should analyse the capital structure of the assigned company following the guidelines provided below, and determine whether the firm is under, over or correctly leveraged.

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A printed copy of the report is due at the beginning of class during the week of 28/10/2013. o A soft copy of the report must also be submitted to a drop-box through UTSOnline by this deadline.

GUIDELINES FOR THE REPORT

• In your report, you must apply the theories and concepts discussed in class to the facts of the firm assigned to your group. The report should demonstrate your understanding of the theories and their practical implications. • • The report should be no longer than 13.5 pages, including the executive summary, tables and graphs and references, but excluding appendices. You can include up to 4 pages of appendices. The report will be marked on both its content...