CORPORATE FINANCE AND INVESTMENT PROJECT WORK

Activity

Download 2021 and 2022 annual financial statements of GOIL-GH and use it to answer the questions under the thematic areas provided below.

Thematic areas

I. Corporate Governance Analysis

Is the GOIL-GH a company where there is a separation between management and ownership? If so, how responsive is management to stockholders?

What are the other potential conflicts of interest that you see in GOIL-GH?

How does GOIL-GH interact with financial markets? How do markets get information on GOIL-GH?

How does GOIL-GH view its social obligations and manage its image in society?

II. Stockholder Analysis

What is the breakdown of stockholders in GOIL-GH - insiders, individuals and institutional?

Who is the marginal investor in GOIL-GH stock?

III. Risk and Return

What is the risk profile of GOIL-GH Company?

How much overall risk is there in this firm?

Where is this risk coming from (market, firm, industry or currency)?

How is the risk profile changing?

What return would you have earned investing in this companys stock?

Would you have under or outperformed the market?

How much of the performance can be attributed to management?

How risky is this companys equity? What is its cost of equity?

How risky is this companys debt? What is its cost of debt?

What is GOIL-GH Companys current cost of capital?

IV. Measuring Investment Returns

Is there a typical project for GOIL-GH?

If yes, what does it look like in terms of life (long term or short term), investment needs and cash flow patterns?

How good are the projects that the company has on its books currently?

Are the projects in the future likely to look like the projects in the past?

Why or why not?

V. Capital Structure Choices

What are the different kinds or types of financing that GOIL-GH Company has used to raise funds? Where do they fall in the continuum between debt and equity?

How large, in qualitative or quantitative terms, are the advantages to this company from using debt?

How large, in qualitative or quantitative terms, are the disadvantages to this company from using debt?

From the qualitative trade-off, does this firm look like it has too much or too little debt?

VI. Optimal Capital Structure

Based upon the cost of capital approach, what is the optimal debt ratio for GOIL-GH?

Bringing in reasonable constraints into the decision process, what would your recommended debt ratio be for this firm?

Does GOIL-GH have too much or too little debt relative to the sector? relative to the market?

VII. Mechanics of Moving to the Optimal

If GOIL-GH actual debt ratio is different from its recommended debt ratio, how should they get from the actual to the optimal? In particular, should they do it gradually over time or should they do it right now? Should they alter their existing mix (by buying back stock or retiring debt) or should they take new projects with debt or equity?

What type of financing should this firm use? In particular, should it be short term or long term? What currency should it be in? What special features should the financing have?

VIII. Dividend Policy

How has GOIL-GH Company returned cash to its owners? Has it paid dividends or bought back stock? how much cash has the firm accumulated over time?

Given this firms characteristics today, how would you recommend that they return cash to stockholders (assuming that they have excess cash)?

IX. A Framework for Analysing Dividends

How much cash could GOIL-GH have returned to its stockholders over the last few years? How much did it actually return?

Given this dividend policy and the current cash balance of GOIL-GH, would you push the firm to change its dividend policy (return more or less cash to its owners)?

How does this firms dividend policy compare to those of its peer group and to the rest of the market?

X. Valuation

What growth pattern would you pick for GOIL-GH? How long will high growth last?

What is your estimate of the value of equity in this firm? How does this compare to the market value?

What is the key variable (risk, growth, leverage, profit margins...) driving this value?

If you were hired to enhance value at GOIL-GH, what would be the path you would choose?

Submission arrangement

Please note the following submission guidelines for this project work:

The submission should include the following documents in soft copy:

A comprehensive report that covers the thematic areas presented in the order above.

A copy of the financial report of GOIL-GH Company.