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Business Valuation And Analysis: Strategy

  341 Downloads   |   3 Pages 584 Words   |   Published Date: 27/10/2016

Question:

Describe about the Business Valuation and Analysis for Strategy?
 
 

Answer:

Summarization of ALTADIS Strategy:

The cigar manufacturing company Altadis has many strategies for their company to make their company to earn more profit by selling cigars to different countries of the world. One of the strategies adopted by the cigar manufacturing company is

Cash Flow Driven:  The Altadis Company has reduced the fiscal opinion for the cigar division of France. They have reduced the rate of tax for the product of France. But the manufacturing company has increased the price of the cigar in the French market. They have reduced the volume of blond cigar in French market in two consecutive years. That is why the annual selling cigar is declined by almost 2 %. The total remuneration yield is increasing in every year as the company is buying back the share from the share holders of Altadis. But still the company is having the growth in revenue of almost 6%.

Valuation: The company is buying back the shares capital of the company in every year and returning millions of money to the share holders of the company. The company is also declaring the dividend to its share holders. The total remuneration of the company is increasing in every year. The estimated total remuneration of the company is almost 600 million Euro.

 

Ratio Analysis: The Altadis Company is entered into the emerging market. The Altadis Company is trading at a large discount on their EBITDA and EBIT. The price earnings ratio of the Altadis Company is falling down. This is because the lower leverage value and the fiscal funds. The lower ratio of BAT’s is exposed to the litigation in the market and for the highest revenues of shares in the emerging market.

The strategies approved by the Altadis Company should improve:

The research analyst after observing the strategies acquired by the company found that the Altadis Company should perform better during the year. This is because the annual sales of the cigar are declining vigorously. The company should counter balance the negative performance of cigar sales in the French market.

The revenues of the cigar company are falling by almost 4.1%. The EBDITA of the cigar company is declining by almost 5.2%. This is because the volumes of sales of cigar in the French market are declining. The sales volume of cigar in the French market should be increased to improve the revenues of the company. If this situation continues for the company then the operating results of the company will also decrease.

According to the research analyst, the company should stop buying back the shares of the company from their share holders. The sales volume of the cigar should be improved to generate the revenues for the company. If both the revenues of the company and sales volume of the company increased then the share price of the company will also increase in the French market.

 

Evaluation of Strategies:

If the company stops buying back the shares from the share holders of the company then the company will have enough funds with them. The share price of the company will also increase in the share market. If the company improves the sales volume of the product then the company will generate more revenues for the company. The price earnings ratio of the company will also increase. The company can earn a huge amount of profit which will help the company to generate more funds for the betterment of the company.

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