Halfords business analysis | Free essay | Management essays

Halfords blood analysis Free essay Management essays aditHalfords is the UKs conduct retailer, on the basis of turnoer, in each of the key harvest-feast markets in which it ope reckons, being, car of importtenance, car enhancement and leisure (including cycles and cycle accessories and chapiter boxes etc.Founded as a local hardw be store in Birmingham in1892by F W Rushbrooke, Halfords has since grown to try out its position as the leading retailer of car parts, car enhancement, cycles and travel solutions in the UK.In this stem the take account of the company is evaluated on the basis of its up-to-the-minute statutory accounts. In this report the alternative sources of finance available for the company are excessively discussed. The areas of corpo ordinate find when raising finance, paying particular attention to hard currency in hand available to the company are also discussed. trade valuationA formal assessment of the value of a pipeline using pre-de borderined and by and large agreed upon formulas. in that respects a range of ways to value a melodic line. Valuations base on multiples of future cabbage and the capitalisations of future cashflows are the most everyday. There are a number of common valuation methodsAsset establish business valuation methods total up all the investments in the business. Asset-based business valuations can be done on a spillage anxiety or on a liquidation basis.Agoing concern asset-based border ondetermines the business displace balance sheet value of its assets and subtracts the value of its liabilities.Aliquidation asset-based approachrepresents the net cash that would be received if all assets were sold and liabilities paid off.Earning value approachesEarning value business valuation methods are predicated on the idea that a businesss true value lies in its ability to produce wealth in the future. The most common earning value approach is about Capitalizing Past Earning.With this approach, a valuator determines an pass judgment level of cash flow for the company using a companys place down of past lolly, normalizes them for unusual revenue or expenses, and multiplies the expected normalized cash flows by a capitalization factor. The capitalization factor is a reflection of what place of return a reasonable purchaser would expect on the investment, as well as a measure of the risk that the expected earnings will not be achieved.Discounted Future Earningsis another earning value approach to business valuation where instead of an average of past earnings, an average of the edit out of predicted future earnings is employ and divided by the capitalization factor. trade value approachesMarket value approaches to business valuation attempt to establish the value of the business by comparing the business to similar businesses that reach recently sold. Obviously, this method is only going to work well if thither are a sufficient number of similar businesses to compare.Valuation of Halfords victimization the Market Value approach In the report the Halfords Company is going to be evaluated using the market value approach. Valuation Multiple A value, typically expressed as a factor, used to multiply a business economic benefit to arrive at the business value.Market-derived business valuation multiplesValuation multiplesderived from similar business sales are a lot used to estimate the likely selling price of a business. These multiples are calculated as ratios which relate some measure of business pecuniary performance to its potential selling price. The most popularmultiplesareCurrant finance structureexchequer policyThe groupings Treasury Policy is structured to examine that passable monetary resources are available for the development of its business whilst managing its currency, interest rate and counterparty realisation risks. The groupings treasury strategy, policy and controls are approved by the Board. The main elements of treasury activity a nd associated risk are outlined below financingThe treasury function arranges sufficient secure financial resources to enable the Group to meet its medium-term business objectives, whilst arranging celerity maturities appropriate to its projected needs. The Group has a syndicated five-year term eagerness, maturing with a bullet repayment in July 2011, totalling 300m of pull bank facilities, comprising a non-amortising term loan of 180m and a revolving credit facility of 120m, which, together with cash surpluses, stomach adequate funding for the Groups operations.Counterparty credit riskThe Group actively manages its relationships with a panel of high quality financial institutions. Credit risk is controlled by the treasury function setting counterparty credit limits by reference to published order agency credit ratings and the embodied Default Swap market. All much(prenominal) counterparties, which constitute the syndicated bank group, held at least an A credit rating at the t ime of the facility agreement. The Treasury Policy recognises that an exposure to a counterparty arises in relation to investments, derivatives and financial instruments.The Groups treasury departments main responsibilities are toEnsure adequate funding and fluidity for the GroupManage the interest risk of the Groups debtInvest surplus cashManage the clearing bank operations of the Group andManage the contrary commuting risk on its non-sterling cash flows.The Groups debt management policy is to provide an appropriate level of funding to finance the Business Plan over the medium term at a competitive equal and ensure flexibility to meet the changing needs of the Group. The Group has a syndicated five-year term facility totalling 300m that provides the Group with committed bank facilities until July 2011.The key risks that the Group faces from a treasury perspective are as followsFinancial riskThe Business Plan and cash flow forecasts are subject to key assumptions such as interes t rates and the significance of these risks is dependent upon the level of earnings before interest, tax, depreciation and amortisation and the strength of the balance sheet.Interest rate riskThe Groups policy aims to manage the interest cost of the Group at heart the constraints of the Business Plan and its financial covenants. The Groups borrowings are currently subject to adrift(p) rate and the Group will continue to monitor movements in the patronage market.Foreign currency riskThe Group has a significant motion exposure with increasing, direct source purchases of its supplies from the Far East, with most of the trade being in US dollars. The Groups policy is to manage the foreign exchange relations exposures of the business to ensure the actual costs do not outdistance the budget costs by 10% (excluding increases in the base cost of the product). The Group does not hedge either economic exposure or the translation exposure arising from the profits, assets and liabilities of non-sterling businesses whilst they remain im poppycock.During the 53 weeks to 3 April 2009, the foreign exchange management policy was to hedge between 75% and 80% of the material foreign exchange transaction exposures on a rolling 15-18 month basis. Hedging is performed through the use of foreign currency bank accounts, shoes rates and forward foreign exchange contracts.Credit riskThe Groups policy is to minimise the risk that foreign exchange and interest rate derivative counterparties, the holders of surplus cash and the providers of debt will be unable to fulfil their obligations and also, in the case of lenders, unwilling to extend the loan facilities when they expire. The Group ensured that such counterparties used for credit transactions held at least an A credit rating at the time of syndication (July 2006). Ancillary business, in the main, is directed to the eight banks within the syndicated group.The Treasurer is responsible for determining creditworthiness of each c ounterparty, based on the boilers suit financial strength of the counterparty. The counterparty credit risk is reviewed in the Treasury report, which is forwarded to the Treasury Committee and the Treasurer reviews credit exposure on a nonchalant basis.ConclusionDepending on the financial data provided by the Halfords Company the current financial stability of the company is successfully analyzed.ReferencesAnnual report Halfords PLChttp//www.halfordscompany.com/hal/ir/fininfo/reports/http//www.valuadder.com/glossary/valuation-multiplier.htmlhttp//financial-dictionary.thefreedictionary.comhttp//www.investopedia.com/terms/c/costofcapital.asphttp//www.lse.co.uk/shareprice.asp?shareprice=THTshare=thorntons_plc_ord_10p