Financial Markets Investment Analysis

Financial Markets Investment Analysis

EXECUTIVE SUMMARY

In this paper, we have addressed three different questions. In the first part we discussed the reasons for the mergers and acquisitions carried out by the company. For this, we evaluated different company valuation methods that are helpful in this process.

In the second part, we focused on the ongoing currency wars among the countries and the trend of weakening their own exchange rates for particular reasons.

Finally, different hedging techniques were discussed that are used for the risk management. These risks involve the loss of money value for the price needed to be paid some later time.Answer 1: Company valuation

The need to value the business is becoming increasingly necessary primarily due to increased mergers and acquisitions in recent years. You can define the valuation of the company as the process by which one seeks to quantify the elements that constitute the heritage of a company, its business, its potential or any other characteristic of that capable of being valued. The measurement of these elements is not simple, involving numerous difficulties techniques.

Why evaluate a company?

The motives may be internal, i.e. the assessment is aimed at managers of the company and not to determine its value for later sale. The objectives of these assessments include the following:

Knowing the status of the heritage

Check the management carried out by managers

Establish policies for dividends

D debt capacity study

Capital restructuring

Inheritance, succession, etc.

Business valuation methods

Assets Valuation Method

Valuation of assets of the company aims to determine the price of the assets of an organization that has developed in the market at any given time. Valuation of financial assets is based on replacement cost, thus necessarily taken into account the moral and physical deterioration of some assets.

Overall, assets under the commonly understood are the benefits of a certain value of the material, which are the owner of the property. In this connection, we require an estimate of the value of assets. Methods of asset valuation companies require that the assets can serve a variety of financial and material resources, securities, real estate and so on.

There is a concept evaluation of net assets as determined by the value of the assets, excluding debt payments to the creditor institutions, loans, etc. assessment of the net assets are always in demand, as it allows to establish the attractiveness of a company for a potential investor.

Assessment of a business involves the assets of the following types:

money in cash;

various stocks;

manufacturing equipment;

land;

buildings and structures;

bank deposits;

proceeds from the sale of products;

know-how;

Investments in securities of securities;

Brands and trademarks.

In assessing the financial assets, it is necessary to take into account the fact that the company balance sheet items are divided into non-monetary and monetary assets. The monetary assets, whether it's money in the calculations, bank deposits, short-term financial investments, cash funds, etc. do not need to be reassessed. But the non-monetary assets - products for implementation, the production of unfinished form, capital unfinished construction, manufacturing inventories, fixed assets, finished goods needed for a certain period of time not only in the ...