Applications in Corporate Finance (Buidalot from a corporate finance Essay

Applications in Corporate Finance (Buidalot from a corporate finance perspective) - Essay Example The company lacks cohesion in terms of pulling the efforts of different subsidiaries together and this is the main reason why it is performing poorly. Therefore, there are certain issues that should be taken into account by Buildalot in order to improve its operations as going to be shown in the recommendations section of the report. 6 Market economy 6 Market competition 6 Equity capital structure of the company 7 PEST analysis 7 Major construction projects 8 Office building construction 9 House building construction 10 Business operational issues 11 Mayo project issues 12 Corporate social responsibilities 13 Financial statement analysis 13 Trend analysis 13 Ratio analysis 14 Recommendations 16 Referencing 18 Bibliography 20 Introduction This report deals with business analysis of Buidalot from a corporate finance perspective. This is an Ireland based Construction Company and it has been experiencing cash flow difficulties due primarily to the slow selling of houses and offices in th e Mayo development project. This study will assess the major issues affecting different sectors of business in this construction company. A detailed SWOT and PEST analyses of the situation of the company will be conducted to evaluate the causes of the problems it is currently facing. This study will also evaluate the financial situation of different projects being undertaken by the company through business strategy techniques and financial strategy techniques like re-forecasting, cost of capital, net present value and business valuation. Then appropriate recommendations will be provided at the end of the report in order to effectively deal with the issues raised. Background of the company Buildalot is a 50 year old construction company and it is based in Ireland. The company was incorporated 30 years back as a group of companies. This consists of different wholly owned subsidiaries that operate in different segments of the construction industry. The three major segments that are the main focus of the company’s business include the following: major construction projects, house building construction and office building construction. The subsidiary that operates in major construction projects is based in different countries but it mainly focuses on Ireland. Office building subsidiaries undertake projects related to office constructions. It operates in Europe and Middle East along with successful penetration in the home country of Ireland. The company House building subsidiaries also operate internationally. The company initially used to engage in residential house building in Ireland and it started construction of these major segments after incorporation about 30 years ago. Situation analysis (SWOT) Basically, SWOT stands for strengths (S), weaknesses (W) while on the other hand the external environmental factors are regarded as either opportunities or threats. The aim of performing a SWOT analysis is to critically analyze all the internal and external fac tors’ that may affect the operations of the organization (Strydom, 2004). The table below summarises the SWOT analysis for Buildalot. Strength Weakness 1. The current ratio of the company’s working capital is high 2. The fixed asset turnover of Buildalot is also high 3. Employees are able to deal with