QuestionQuestion

Choose a company (e.g. Yahoo, Volvo, Hewlett Packard, Sony etc):

1) perform an environmental scan for the company;
2) perform a risk analysis for the company;
3) perform a financial analysis through the use of ratios;
4) compute the free cash flow for the most recent year for which data could be found;
5) determine the company’s cost of capital;
6) determine the company’s Market Value Added and;
7) determine the company’s Economic Value Added.

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Introduction
General Motors Company (the new name of General Motors Corp. following its emergence from bankruptcy in FY09) designs, builds and sells cars, trucks and automobile parts globally. The company has witnessed an impressive turnaround and has rapidly emerged from bankruptcy related restructuring. The company entered bankruptcy protection on 1-Jun-09, and on 10-Jul-09, the present successor company acquired considerably all the assets and assumed certain liabilities of the Old GM. In Nov-10, General Motors completed an initial public offering of common shares. Existing shareholders, particularly the US Treasury, off-loaded a part of their holdings, thereby reducing their respective stakes. GM also sold Series B preferred stock, to utilize the proceeds to fund US hourly and salaried pension plans and to buy Series a preferred stock. Post the IPO, GM is minority owned by the US government, with substantial stakes held by the Canadian government, the United Auto Workers union (UAW) and former GM creditors. GM and UAW negotiated a new labor agreement that protects its low break-even level in the US.

Environmental Scan
General Motors Company GM announced it is acquiring the European, Latin American, and Chinese operations of Ally Financial. The deal is expected to close in mid-2013 and is still subject to regulatory approval. GM only said the purchase price is about a $550 million premium to book value but Ally's own press release said the price is about $4.2 billion and the premium is to tangible book value. GM will also contribute about $2 billion of cash to GM Financial to increase the captive's equity standing....
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