CORPOATE FINANCIAL Essay Example | Topics and Well Written Essays - 1500 words

CORPOATE FINANCIAL - Essay Example Thus major companies conduct an investigation to discover the actual situation of the company. or ‘Is the profit generated by the company solely based on the sale of its product, or does a part of the profit comes from other sources such as investment in a financial market, or any other source which will not be possible for our company’s board to manage?’ (Hutchison, S., 1968) Well... considering the situation of these two companies at end, basically we have to imagine ourselves to be acquirers and analyze the best price for purchase and the viability of purchase of FKI for Wolseley. So, to be able to do that we will analyze the data of FKI Plc and compare its various figures against our company’s figures, so that we may establish a ratio based comparison between various factors such as Profits, Activity, Liquidity, Gearing ratio, etc. But we will not forget other positive factors such as the growing business in rest of the world, the creditability created by the brand names owned by FKI, and finally the fact that a larger and more renowned company such as Wolseley would definitely create a huge impact on the creditors and other parties (in a positive manner). Well... the current ‘ratio’ indicates that both the companies have a very similar assets and liabilities position, with 1.65 for Wolseley and 1.57 for FKI. Both these companies have their own plus points and loopholes. Overall, Wolseley is 6 times larger in terms of Working capital. But in terms of Net Asset (Total Asset – Total Liabilities) Wolseley has a much higher reserve by superlating FKI by 13 times, this has just doubled if we compare it to the current ratio. Primarily, we have evaluated the company’s balance sheet. According to the balance sheet as provided by the company’s Board of Directors, the situation doesn’t look good in the current year, Fixed and current assets combined have fallen by about 98.7 million pounds, not only that