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Orporate finance - Essay Example

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Orporate finance

This analysis will include; A fundamental analysis and valuation of the British Airways using the free cash flow method. And a recommendation will follow suit. Valuation methods will be attended for the purpose of selecting equities for portfolio investments. Valuation methods though are used for proper valuation however, they do not fit all in one place some methods are used for specific companies, as we have inherent differences within firms, companies, industries, outlets etc. and method falls with each member. Some may take more than one, however, about tour valuation methods are to be used.
Dividend capitalization goes in to baring out the real truth of a company, its history and ways of behaviour, e.g. Paying of dividends, expansion plans, paying history of business, operation cushion. It opens the investors eyes to see the risks of investment and take caution.
Discussions concerning real option analysis in strategic investment decisions will be adequately attended to stressing and bringing out the use of real option analysis in strategic investment decisions. However in attempt to give a fundamental analysis of the British Airways, the examination of the subject will refer to it's earnings, each flow, equity value and sales and other accounting statements of the airways will be critically analyzed and discussed.
The financial record of the ...
al analysis of the British Airways, the examination of the subject will refer to it's earnings, each flow, equity value and sales and other accounting statements of the airways will be critically analyzed and discussed.
The financial record of the British Airways over the years has been quite interesting because for the past three years, its net profit has been appreciating steadily. Since the year 2003 the British Airways have seconded success at the recorded of every year. Below is a table showing the progress of the British Airways since 2003-2005.

Year Ended
Turn Over (EM)
Profit/loss before Tax
Net profit/Loss (EM)
2005
7,813
415
251
2004
7,560
230
130
2003
7,688
135
12

It is interesting and important to note the difference in the profit margin this clearly shows and suggests that some new policies or new managerial skills have been employed to rightly enhance such as steady progress without any break for 3 consecutive years. This is undoubtedly true, reference to the table below.
Year
Turn Over (Em)
Profit /Loss before Tax (EM)
Net profit/Loss (EM)
2002
8,340
-200
-142
2001
9,278
150
114
2000
8,940
5
-12
It represents the financial progress of the British Airways within 3 years, from 2000 to 2002. It is clear that at a point something was wrong to have prompted the year 2000 lost and the following year a gain which was short timed following the terrific loss which came in the year 2002, certainly instability was hanging around causing havoc principally caused by forces of management, finance and economy etc.
Important to note is the fact that in the history of the British Airways since 1996 has not recorded steady progress for three good years in a roll, until now. The table below explains the fact that since 1996 it is only between 2003 and 2005 that the ...Show more

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Orporate finance Essay essay example
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