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Analysis of International Business Finance - Research Paper Example

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This research paper discusses the two of the most important components of finance to any company which is that of shareholder’s equity and debt. The paper analyses to develop synergies for the companies. The case of Arcelor-Mittal was also no different…
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Analysis of International Business Finance
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Download file to see previous pages The Sony Group is a global leader in the segments like electronics, games, entertainment and financial services. As the company announces that their aim is to leverage their uniqueness to carry out their strategy aggressively, the same is true for the debt-equity structure of the company.
The debt-equity ratio of a company defines the leverage that the company has initiated in terms of funds. Debt-equity ratio is calculated by dividing the total debt by the equity fund. Sometimes, it is also calculated on the basis of the long term borrowings and not the entire debt. The long term borrowings of the Sony Group for the accounting year ended on March 31, 2008, was ¥ 729,059 million and the short term borrowings was figured out to be ¥ 63,224 million. Apart from the two headings of liabilities, there was also the current portion of long term borrowings of ¥ 291,879 million. Therefore, the total debt of the group was ¥ 1,084,162 million. The equity of the company on the same date was ¥ 3,465,089 million. Therefore, the debt-equity ratio for the group as on 31st March 2008 was approximately 0.313. The result shows that the company did not leverage much as around 31% of the entire fund is raised through the loan. Comparing the debt-equity ratio of the company with the previous year i.e. 2007, it was 0.325! The market value of shares of Sony as on March 31st, 2008 was ¥ 3.99 trillion i.e. 3990000 million. Therefore, the debt-equity ratio as per the market value was 0.27 which was even lower than the book value. The analysis reveals that the company is moving away from being leveraged more as it has a decreasing trend of debts. Among the debts, the components of interest-bearing debt have also reduced from the previous year by 1.1% i.e. ¥ 12.3 billion. The maturity of the long term debt is always above one year. The analysis shows that the company is reducing the long term debt over the years. ...Download file to see next pagesRead More
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