The following table presents NN (an energy company) financial information for 2017. Statement of Financial Position Assets Non-current asset Goodwill Intangible asset, net Property, plant and equipment Available for sale securities Loan and receivables at amortized cost Derivative instruments Investment in entitles accounted for using equity Method Other assets Deferred tax assets TOTAL NON-CURRENT ASSETS Current Assets Loan and receivables at amortize cost Derivative instruments Trade and other receivable net Inventories Other assets Financial assets at far value through income Cash and cash equivalent Asset classified and held for sale TOTAL CURRENT ASSETS TOTAL ASSETs LIABILITIES Shareholders Non-controlling interest TOTAL EQUITY Non-current liabilities Provision Long term borrowings Derivative instruments Other financial liabilities Other liabilities Deferred tax liabilities TOTAL NON-CURRENT LIABILITIES Current Liabilities Provisions Short term borrowings Derivative instrument Note s Dec.31.201 7 (000) Dec.31.201 6 (000) 12 13 14 15 15 15 3 17,285 6,504 51,024 2,656 2,976 2,948 7,409 17,372 6,639 57,739 2,997 2,250 3,603 6,624 25 10 557 803 92,171 431 1,250 98,905 15 15 15 25 25 15 15 4 599 7,378 20,311 4,155 8,492 1,608 8,931 6,687 58,161 150,332 595 9,047 20,835 3,656 10,656 1,439 9,825 3,506 59,555 158,499 36,639 5,938 42,577 39,578 5,870 45,447 18 15 15 15 25 10 18,428 25,292 2,280 32 1,009 5,220 52,960 19,461 24,411 3,410 200 1,203 6,775 55,461 18 15 15 3,340 8,176 8,720 2,747 12,539 9,228 2 17 Trade and other payables Other liabilities Liabilities directly associated with assets classified as held for sale TOTAL CURRENT LIABILITIES TOTAL EQUITY AND LIABILITIES 15 25 4 16,432 14,756 3,371 17,075 15,702 300 54,795 150,332 57,591 158,499 Income Statement Notes Revenue Purchases Personnel costs Depreciation, amortization and provisions Other operating expenses Other operating income CURRENT OPERATING INCOME Share in net income off entitles accounted for Using the equity method CURRENT OPERATING AFTER SHARE IN NET OF ENTITLES ACCOUNTED FOR USING THE EQUITY METHOD Mark to market on commodity contract other than trading Instrument Impairment losses Restructuring cost Changes in scope of consolidation Other non recurring items INCOME/LOSS FROM OPERATING ACTIVITIES Financial expenses Financial income NET FINANCIAL INCOME/(LOSS) Income tax benefit/(expenses) NET INCOME/(LOSS) RELATING TO CONTINUED OPERATIONS NET INCOME/(LOSS) RELATING TO DISCONTINUED OPERATIONS NET INCOME/LOSS Net Income (Loss) Group Share Of which net income(loss) relating continued operation, group share Of which net income(loss) relating discontinued operation, group share Non-controlling Interest Of which non controlling interest relating continued operation, Of which non controlling interest relating discontinued operation BASIC EARNINGS (LOSS) PER SHARE (EURO) Of which basic earnings (loss) relating continued operation per share Of which basic earnings (loss) relating discontinued operation per share DILUTED EARNINGS (LOSS) PER SHARE (EUROS) 7.1 7.2 7.3 7 3 8.1 8.2 8.3 8.4 8.5 8 9 10 11 11 Dec.31.201 7 (000) 65,029 (36,740) (10,062) (3,736) (11,077) 1,441 4,835 437 5,273 (307) (1,317) (671) 752 (911) 2,819 (2,122) 827 (1,296) 425 1,948 290 2,238 1,423 1,226 196 815 722 93 0.53 0.45 0.08 0.53 Of which Diluted earnings (loss) relating continued operation per share Of which Diluted earnings (loss) relating discontinued operation per share Based on the above: 1) a. Appraise NN's capital structure using the tools discussed in the module. 0.45 0.08 b. Critically evaluate theoretical advantages and disadvantages of the company's capital structure with regards to the debt and equity structure of the business. How these advantages and disadvantages apply to the specific company? accompany your answer with significant evidence from the literature. 2) a. Assess the above company from a short-term financing perspective and comment on the application of the matching principle. What conclusions can you draw, how are they linked with the academic literature? b. Critically evaluate the potential advantages and disadvantages of the NN's strategy around the working capital and backup your answer with significant evidence from the literature