The Financial Ratios of Cwire Ltd against Oxig (Research Paper Sample)
You are required to prepare a report, using the information provided above covering the following areas:
a) Benchmark the financial ratios of the Cwire Ltd against your preferred proxy company. (30 marks)
b) Calculate an up-to-date estimate of the company's cost of capital using publicly available data. Discuss and evaluate how the company might meet the funding requirements of the project. (30 marks)
c) Prepare a spreadsheet model forecasting the impact over the next 5 years of the business case proposal set out above. Critically evaluate the project by using investment appraisal techniques and advise possible revision to the proposal.
(30 marks)
d) Academic presentation and conventions (10 marks)
International Finance
By [Name]
Course
Professor's Name
Institution
Location of Institution
Date
Question one
Introduction
Oxford Instruments is a technology company that designs and manufactures systems for industrial use. The firm is also based in the U.K. and is publicly listed. Therefore, its financial records are publicly available. OXIG and CWIRE LTD are similar in size, making OXIG appropriate for benchmarking. The firm's share price currently retails at around £25.75. The financial analysis will use the 2020 financial report that will offer important insights relevant to this analysis. Hypothetically, CWIRE LTD is one of OXIG's key rivals. In light of this, the current section will benchmark the financial ratios of CWIRE ltd against OXIG.
Table 1: Financial ratio analysis
CWIRE LTD
OXIG LTD
Profitability ratio
2020
2020
ROCE (%)
17%
15%
Gross profit margin (%)
60%
50%
Net profit margin (%)
43%
11%
Net asset turnover (times)
0.32
1.18
Liquidity ratio
Current ratio
1.2
1.3
Gearing ratio
Debt/Equity ratio (%)
4.0%
7.4%
Capital gearing ratio (%)
3.8%
6.8%
Interest Coverage ratio (times)
93.75
30.62
Investor ratio
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