StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Strategic Financial Management - Case Study Example

Comments (0) Cite this document
Summary
The stock market value of a listed corporation is determined by many factors, among them changes in inflation, consumption, interest rate, currency exchange rate and oil prices. Stability in these prices and rates is important for investors to determine the correct book value of listed firms and their assets, which serves as basis for making a wise stock transaction…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97% of users find it useful
Strategic Financial Management Case Study
Read TextPreview

Extract of sample "Strategic Financial Management"

Download file to see previous pages As a result, the share prices listed in the stock market do not always reflect the true market value of a company. This perception has gained such currency that people who invest in stocks are driven more by speculation than certainty. The thinking that the stock market is not always a reliable indicator of firm value works against the interests of the company seeking capital for expansion because it may not be able to attract as many investors as it wants. One such firm is the fast-growth airline EasyJet plc, which was ranked No. 72 by Business Week in the list of the World's Most Innovative Companies in 2006. In the view of its officers, the airline's share prices have been distorted by the current volatilities that they fail to represent the true market value of the firm. Since the firm's formal listing in the London Stock Exchange in 2000, exactly five years after its establishment in 1995, EasyJet has worked hard to create value for shareholders but it seems unconvinced by the share prices reflected in the trading floor. For the benefit of investors and its board of directors that needs accurate financial data for decision-making purposes, EasyJet would naturally want to establish the correct market value of the firm.
This paper affects a strategic financial analysis for and in behalf of EasyJet to find the true stock market value o...
Then we chronicle how EasyJet plc has delivered such value to shareholders for the past five years and the trajectory of change in its equity value over the last 12 months, with the market value picking up in 3-4 months and then dropping without warning. To determine the firm's true market value, this paper evaluates EasyJet's equity at current prices using the firm's net asset value, price-earnings ratio and discounted cash flow for 10 years. Finally, we attempt to reconcile any differences in value obtained from these financial analysis methods. Based on the results, we set the correct stock market value for the firm.
Strategic Financial Management
Through strategic financial management, the company may find its true stock market value by isolating the sum of all expected future cash flows discounted to the present and then dividing the sum of these discounted cash flows with the number of available shares. Equity valuation can also be done by comparing the firm's current share price with its net asset value, price-earnings ratio and its discounted cash flows for the next 10 years.
Strategic financial management is defined as the identification of strategies that can maximize an organization's present net value in order to increase shareholder value (Leading Concepts, 2006). Its key objective is precisely to create shareholder value. According to Grundy & Scholes (1998), strategic financial management seeks control of the company's bottom line through proactive, involved and customized means in a manner that is dynamic, forward-looking and outward-oriented. In effect, the firm looks at the links between corporate strategy and strategic financial management to see how the process can play a positive and proactive role in ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Strategic Financial Management Case Study Example | Topics and Well Written Essays - 3250 words”, n.d.)
Retrieved from https://studentshare.org/miscellaneous/1532781-strategic-financial-management-case-study
(Strategic Financial Management Case Study Example | Topics and Well Written Essays - 3250 Words)
https://studentshare.org/miscellaneous/1532781-strategic-financial-management-case-study.
“Strategic Financial Management Case Study Example | Topics and Well Written Essays - 3250 Words”, n.d. https://studentshare.org/miscellaneous/1532781-strategic-financial-management-case-study.
  • Cited: 1 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Strategic Financial Management Case Study

Management of the UK Music Industry

Online market demand is dominated by teenagers who have shifted their purchases from singles CDs to mostly illegal downloads of singles tracks, stimulated by continually evolving software and P2P networks. In order to survive, market players have to reconsider their strategies and value propositions – by mergers of music labels; flexible pricing and value-added offers by online distributors and active ethical campaigns, the challenge before these companies is to convert the internet medium from a threat to copyrighted material into an effective distribution channel.
Rivalry among competing sellers in the industry – rivalry among legal internet music sites is not too intensive, because the legal online download ind...
15 Pages(3750 words)Case Study

Nursing Shortage: How it Effects Nurse Management & Leaders

Nearly twenty percent of the hospitals in 2001 had registered nurse vacancy rates in excess of twenty percent. The survey conducted on behalf of the American Hospital Association in 2001 showed that 126,000 full-time registered nurse positions were not filled. The following year in 2002 the U.S. Department of Health and Human Services that the number of states in the United States of America experiencing registered nurse shortages had gone up to thirty. The consequences of the shortage of nurses on the nursing professionals as evaluated by studies showing that the nursing professionals were experiencing burnouts, stress, and lack of job satisfaction, which was likely to compound the issue of shortage of nursing professionals. The...
10 Pages(2500 words)Case Study

Financial Management Analysis of Rio Tinto Plc

Taking into consideration that Harmony is the sixth-largest in the world in the gold mining industry, the choice of Harmony God Mining Co. as a benchmark company is the most suitable and justifiable. Moreover, Harmony has also some investment stake in Rio Tinto, and this situation makes the company more suitable for the choice. At places, the benchmark company’s performances have been better than Rio Tinto, and thus Harmony has a competitive edge as well over Rio Tinto.

Profitability ratios like Operating Margin Ratio, Net Margin Ratio, Return on Assets (ROA), and Return on Equity (ROE) are the performance analyzer of any company. Profit Margin ratios show the relationship between profit and sales. Since profit ca...
8 Pages(2000 words)Case Study

Analysis of Retailco Human Resource Management

The attitude is that if there is time left over from the workday, which there never is, we will put some consideration into HR initiatives. But unless HR is in the hands of someone who is qualified by education and experience to properly give it its due implantation, HR will always be at the end of a long to-do list that seldom gets reached.  This will soon be impractical as HR is becoming a more predominant force in the workplace, ‘HR programs and processes will remain important, but, like accounting and sales, they will be even more powerful as part of the new decision science.’ (Boudreau, and Ramstad)

By giving the responsibility of HR the section/line managers, whose main lot in life is to come in u...
10 Pages(2500 words)Case Study

Customer Relationship Management

 Consumers started looking for variety and lower prices. Through the use of technology, such customer tradeoff against variety and prices is not necessary. The US life insurance industry is large, mature and dominated by a number of large companies and this industry has been one of the early adopters of computer technology (Subramanian & Chatterjee, 2007). The advent of the CRM systems changed the landscape of the insurance industry.

The health insurance organizations use CRM to prepare health proposals and process applications in a much faster and accurate way. The organizations are better able to understand the needs and habits of the customer and provide more efficient service. Companies are able to integrat...
9 Pages(2250 words)Case Study

Diversity Management in Organisations

...Managing Diversity in Workforce Contents Introduction 2. Diversity Management: Challenges and Benefits 2 3. Managing Diversity 3 3 Significance of Involvement culture 3 3.2 Impact of Organizational Ethnicity on diversity 4 4. Best Practices to Manage Diversity 4 5. Conclusion 5 6. Bibliography 6 1. Introduction “Diversity” characterizes the massive amount of individual divergences that subsists amid persons. Workforce diversity is a gathering of the resemblances and discrepancies between workers in such sorts as “age, sexual category, cultural inheritance, physical capability and race.” (POLLITT, David, 2006) As of today, diversity in the place of work is widely acknowledged as an advantage that contributes to a business institution’s base...
6 Pages(1500 words)Case Study

Organizational Change Management of LG Electronics

The resistance to changes in organizations is most prevalent at the lower ranks of the ladder due to employees distrusting the reasoning by management behind the decisions or the lack of respect of the acumen of their leaders. This attitude permeates in the workplace, staff ranks, sections, and even over the entire organization. However, there are those in the organization who always look forward to changes believing it will herald better opportunities for them and improve the working conditions for them. Former US president John F. Kennedy1 who wrote, “Change is the law of life and those who look only to the past or the present are certain to miss the future”, aptly elucidated this concept of change (Warren, Benne and...
12 Pages(3000 words)Case Study

Introduction to Change Management

Management often follows a “change management process” to change the existing process or activity.
Change management is a systematic approach for dealing with change that takes place in the organization as well as at the individual level. Such change management comprises of three aspects: adapting change, controlling it and finally affecting it. These three aspects of change management were well explained in three stages of change model given by Lewin (1952) and the three stages are “unfreezing”, “change” & “refreezing” (Orlikowski & Hofman, 1997). Another model for change was introduced by Prosci after conducting a research on more than 1000 companies from 59 countries....
7 Pages(1750 words)Case Study

Risk Management in the Airline Industry

With revenues in excess of ₤9 billion and a fleet of 245 aircraft as of March 2009, Heathrow-based BA’s risk management strategies provide an excellent example.
b) easyJet Plc, a Low-Cost Carrier, flying to more than 100 destinations in Europe, UK, and Northern Africa, and clocking over 50 million seats, with revenues of ₤2.4 billion in 2007-08 [2]. Covering over 380 routes with a fleet of 165 aircraft as of September 2008, Luton-based easyJet’s risk management strategies provide another excellent example with a different set of policies.

The airline industry, internationally, is characterized by its exposure to substantial operational and financial risks. Financial risks result in uncertainly in key pa...
6 Pages(1500 words)Case Study

Nutrition and Lifestyle Management

Vitamins and minerals are micronutrients that are only required in small quantities but are indispensable in maintaining a strong and healthy body. Most individuals should be capable of obtaining all the nutrients they require by consuming a healthy, diverse diet, even though there are a few exemptions. For instance, females thinking about getting pregnant are advised to consume a folic acid supplement to prevent the abnormalities within the child. (What are nutrients? n.d.).

In this study, my case history is presented. I am 41 years of age and trying very hard to lose weight. There are no known diseases in my family that I know of and the only thing that I suffer from is severe constipation. Constipation may be a conti...
11 Pages(2750 words)Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Case Study on topic Strategic Financial Management Case Study for FREE!

Contact Us