2. The next stage is screening, which is the process of filtering and select among the most viable candidate targets for acquisition. The screening process is not performed if the company has only identified one candidate.
3. The next step is a formal offer. The company forms a team that is responsible for the implementation of acquisition. When companies recruit skilled personnel from outside, or use services from outside the company, then this party will join the team and then approaches the target.
4. The fourth stage is due diligence, which is a thorough in depth investigation of the various aspects of the target company.
5. The fifth stage is the negotiation / deal. In this stage, there are two parties of the target company who must agree that the acquisition process is running normally, which is the management and the shareholders. If both parties agreed the terms, then the deal will be done.
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Leverage ratio is a ratio that shows some part of the overall capital and funds spent by debt. Analysis tools used are Debt to Equity Ratio (DER) and Debt Ratio (DR). Debt to Equity Ratio is the comparison of amount of debt to total capital. This ratio shows the ability of a company to meet the overall debt by using their own capital. Meaning, if at any time the capital liquidated, the company has been able to meet both short-term liabilities and long-term liabilities (Muqorobin & Nasir, 2009). Second indicator in Leverage Ratio used in this study is Debt Ratio (DR). Debt Ratio is a comparison of total debt to total assets that aims to measure how much the entire debt is secured by the company.
The next ratio used in this research is Market Ratio. Indicator used in Market Ratio is Earnings per Share (EPS). Earnings per Share shows the share of profit received by shareholders for each share owned. Large or small Earnings per Share received is influenced by net income and the number of shares owned by the
Net working capital represents organization’s operating liquidity. In order to compute the net working capital, total current assets are divided from total current liabilities. When there is sufficient excess of current assets over current liabilities, an organization might be considered sufficiently liquid. Another ratio that helps in assessing the operating liquidity of as company is a current ratio. The ratio is calculated by dividing the total current assets over total current liabilities. When the current ratio is high, the organization has enough of current assets to pay for the liabilities. Yet, another mean of calculating the organization’s debt-paying ability is the debt ratio. To calculate the ratio, total liabilities are divided by total assets. The computation gives information on what proportion of organization’s assets is financed by a debt, and what is the entity’s ability to pay for current and long term liabilities. Lower debt ratio is better, because the low liabilities require low debt payments. To be able to lend money, an organization’s current ratio has to fall above a certain level, also the debt ratio cannot rise above a certain threshold. Otherwise, the entity will not be able to lend money or will have to pay high penalties. The following steps can be undertaken by a company to keep the debt ratio within normal
Financial Leverage Analysis Regarding financial leverage, the debt percentage ratio increased from 84.95% to 89.92%, indicating an increase in the amount of The Home Depot’s assets that are financed with debt. The debt to equity ratio drastically increased, from 5.65 to 8.92, showing a drastically increased amount of financial leverage in the company. This may not always be good for a company, as it means there is a very large amount of debt. However, the quick ratio had virtually no change (decreased by .01), showing that an increase in debt and financial leverage did not affect cash and cash equivalents. In fact, cash and cash equivalents increased, as stated in the above paragraph citing vertical analysis.
This section will identify Target's proposed acquisition terms, price, financing, and potential negotiation strategies. This segment will also include price / earnings ratios, book value, current market value, and liquidation based on the supporting financial data. Also in this part will be a discussion of the general and specific risks inherent in an acquisition strategy. Background Information on Target According to www.targetcorp.com, Target is an upscale discount retail chain that sells quality products at attractive prices, and prides itself on clean, spacious, and guest-friendly stores.
Ratio analysis are useful tools when judging the performance of a company by weighing and evaluating the operating performance (Block-Hirt). There are 13 significant ratios that can separate by four main categories, profitability, asset utilization, liquidity and debt utilization ratios. The ratio analysis covered here consists of eight various ratios with at least one from each of these main categories. These ratios were used to compare and contrast the performance of Verizon versus AT& T over the years 2005 and 2006.
Response: The process consists of screening and interviewing potential candidates through online posting boards and third party listing sites. Once a candidate pool is acquired the top qualified individuals are passed onto the Directors of the respected department. Once the candidates resumes are reviewed they are called in for a first round interview. Members present at the interview at the department heads and the CEO/Executive Director of the organization. A second and third round interview is conducted to narrow down the candidates based on strategic questions.
The fourth ratio we will analyze is earnings per share. Earnings per share (EPS) are the number of dollars earned during the period on behalf of each outstanding share of common stock.
It is a step of defining the goals of the projects and the results are aimed at reaching certain levels of productivity of customer satisfaction. The second stage is measure, and it is the stage of collecting data and facts and evaluating current operational performance. The third stage is analyze with the purpose of developing methods and theories that will best suit the solving of the problem; it is also a stage of detecting cause-and-effect ties of the processes. The fourth stage is improve, it is aimed at generating ideas for reaching the desired process improvement. Finally, there is the control stage that is about monitoring the operations to find out whether the process of improvement is smooth and the problems were solved (Meredith & Shafer,
This is where a firm has a research team look in to possible new ideas
There are 5 stages that consisted in the buyer decision process of a traditional Porsche customer such as need recognition, information search, evaluation of alternatives, purchase decision and postpurchase behavior.
Ratios traditionally measure the most important factors such as liquidity, solvency and profitability, as well as other measures of solvency. Different studies have found various ratios to be the most efficient indicators of solvency. Studies of ratio analysis began in the 1930’s, with several studies of the concluding that firms with the potential to file bankruptcy all exhibited different ratios than those companies that were financially sound.
Over the last few years, the pressures emanating from international competition, financial innovation, economic growth and expansion, heightened political and economic integration, and technological change have all contributed to the increased pace of mergers and acquisitions.
The third phase is norming. This is when team member have an agreement on who does what, the roles and responsibilities are clear and acceptable. Decisions can be delegated to individuals within the group. The team discusses and develops its processes and working methods. Furthermore a leader is also picked which is general respect other member and some leadership is more shared by the team to develop everyone skills.
The third step is the norming phase. This is the phase where commitment is solidified and accountability is important (Lencioni, 2002). In the norming stage, the team members start developing their own standards of performance. This stage defines the specifics of what makes acceptable versus unacceptable behavior. For instance, the team can define deadlines, dress codes and attendance at meetings. Power struggles have been resolved through discussion, though conflict will still be common if the team has established a trusting environment. In the norming stage, the team members start developing their own standards of performance. This stage defines the specifics of what makes acceptable versus unacceptable behavior. For instance, the team
There are many factors that must be considered when “scoping” out a company for a potential merger or acquisition. I being the CEO of a major competitive software manufacturing company look for many things. Things such as strategic planning, financial performance, technological advances and marketing opportunities are just some of the factors that must be looked at when considering another company for acquisition. In this case, Microsoft Corporation is our target. I will be examining the above-mentioned factors before making my decision on whether or not an acquisition will be feasible.
A question for the class, what do you think of Debt Ratios is a good test for Real Estate. We are by nature in an industry that always have large amount of debt. What do you think?