Choose an emerging market multinational. Conduct some research about where the c

Question

Choose an emerging market multinational. Conduct some research about where the company raises capital to fund its international growth. Do you think the cost of capital incurred by the company is:1. Comparable to its domestic counterparts? Explain.2. Comparable to U.S. or other industrialized country firms in its comparable industry?In response to your peers' posts, discuss the benefits and threats you see from the movement of the foreign exchange rate from their chosen companies' source of capital.Hint: Cemex of Mexico, Vale of Brazil, Haier of China, Tata Group of India, and Thai Union Frozen Group of Thailand are a few successful MNEs..

Explanation / Answer

Ans;

The Company selected is Ferrari.

Its reiew analysis will be done in the following ways:

1) Capital turnover of the Company is 1.02 that means the company by using the stockholders equity rotate it sales for 1.02 times. Generally more well be the capital turnover ration better will be the efficiency of the company.However the Capital turnover ratio of the company is having increasing trend which is a positive sign.

2.) Cash Profit Margin of the company is 7.68% that indicates that the company is not able to generate enough cash money from its operating activities which is an indication that the working of the company is not upto the mark and its having a decreasing trend which is a bad sign.

3) Return on Capital employed is 4.34 % which is very less that indicates that the company is generating less Profit.

4) Profit Margin Ratio is 1.68% that is again very poor indicating the company;s bad Performance and in the last year it was quite good .

5) Current Ratio of company is 1.44 , which means the company doesnt has enough cash in thier hand. The company ;s will be able to take Sudden high demand Production because they have good net working Capital.

6) Solvency Ratio of Company is 0.64 which isnot reasonable as company does not have enough assets to dispose the total Liability.Generally is shuld be less than 0.5. In all the 4 years its above 0.5

In Millions of EUR (except for per share items) 2014 2013 2012 2011 Revenue 83,413.00 58,868.00 35,623.00 32,684.00 Other Revenue, Total 544 691 256 - Total Revenue 83,957.00 59,559.00 35,879.00 32,684.00 Cost of Revenue, Total 71,474.00 50,704.00 30,718.00 28,252.00 Gross Profit 11,939.00 8,164.00 4,905.00 4,432.00 Selling/General/Admin. Expenses, Total 6,731.00 5,047.00 2,956.00 2,673.00 Research & Development 1,835.00 1,367.00 1,013.00 1,010.00 Depreciation/Amortization - - - - Interest Expense(Income) - Net Operating - - - - Unusual Expense (Income) 153 -923 132 361 Other Operating Expenses, Total 103 49 81 13 Total Operating Expense 80,387.00 56,223.00 34,888.00 32,306.00 Operating Income 3,570.00 3,336.00 991 378 Interest Income(Expense), Net Non-Operating - - - - Gain (Loss) on Sale of Assets - - - - Other, Net - - - - Income Before Tax 2,036.00 2,185.00 705 103 Income After Tax 1,411.00 1,651.00 221 -345 Minority Interest -1,063.00 -317 -80 10 Equity In Affiliates - - - - Net Income Before Extra. Items 348 1,334.00 141 -335 Accounting Change - - - - Discontinued Operations - - - - Extraordinary Item - - - - Net Income 348 1,334.00 519 -838 Preferred Dividends - - - - Income Available to Common Excl. Extra Items 348 1,334.00 141 -335 Income Available to Common Incl. Extra Items 348 1,334.00 519 -838 Basic Weighted Average Shares - - - - Basic EPS Excluding Extraordinary Items - - - - Basic EPS Including Extraordinary Items - - - - Dilution Adjustment 0 0 0 0 Diluted Weighted Average Shares 1,225.87 1,246.89 1,242.82 1,236.88 Diluted EPS Excluding Extraordinary Items 0.28 1.07 0.11 -0.27 Diluted EPS Including Extraordinary Items - - - - Dividends per Share - Common Stock Primary Issue 0 0 0.09 0.17 Gross Dividends - Common Stock - - - - Net Income after Stock Based Comp. Expense - - - - Basic EPS after Stock Based Comp. Expense - - - - Diluted EPS after Stock Based Comp. Expense - - - - Depreciation, Supplemental - - - - Total Special Items - - - - Normalized Income Before Taxes - - - - Effect of Special Items on Income Taxes - - - - Income Taxes Ex. Impact of Special Items - - - - Normalized Income After Taxes - - - - Normalized Income Avail to Common - - - - Basic Normalized EPS - - - - Diluted Normalized EPS 0.37 4.55 1.29 -0.08 MPS 27 31 45 52

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