Strategic Financial Management Case Study Example | Topics and Well Written Essays - 3250 words

Strategic monetary Management - Case Study ExampleAs a result, the conduct prices listed in the stock foodstuff do not always reflect the true commercialize value of a company. This perception has gained such currency that people who invest in stocks are driven more by speculation than certainty. The thinking that the stock market is not always a reliable indicator of firm value full treatment against the interests of the company seeking capital for expansion because it may not be able to attract as many investors as it wants. One such firm is the fast-growth airline EasyJet plc, which was ranked No. 72 by Business Week in the list of the Worlds Most Innovative Companies in 2006. In the view of its officers, the airlines plow prices have been distorted by the current volatilities that they fail to represent the true market value of the firm. Since the firms ceremonial listing in the London Stock Exchange in 2000, exactly quintuple years aft(prenominal) its stimulatement i n 1995, EasyJet has worked hard to create value for shareholders but it seems unconvinced by the share prices reflected in the trading floor. For the benefit of investors and its board of directors that needs accurate financial data for decision-making purposes, EasyJet would naturally want to establish the correct market value of the firm.This idea affects a strategicalal financial analysis for and in behalf of EasyJet to go on the true stock market value o... Then we chronicle how EasyJet plc has delivered such value to shareholders for the past five years and the trajectory of change in its equity value over the last 12 months, with the market value picking up in 3-4 months and then dropping without warning. To determine the firms true market value, this paper evaluates EasyJets equity at current prices using the firms net as fit out value, price-earnings ratio and discounted cash flow for 10 years. Finally, we attempt to reconcile any differences in value obtained from thes e financial analysis methods. Based on the results, we set the correct stock market value for the firm. Strategic Financial Management Through strategic financial focal point, the company may find its true stock market value by isolating the lend of all expected future cash flows discounted to the present and then dividing the sum of these discounted cash flows with the number of acquirable shares. Equity valuation can also be done by comparing the firms current share price with its net asset value, price-earnings ratio and its discounted cash flows for the next 10 years. Strategic financial management is defined as the identification of strategies that can maximize an organizations present net value in array to increase shareholder value (Leading Concepts, 2006). Its key objective is precisely to create shareholder value. According to Grundy & Scholes (1998), strategic financial management seeks control of the companys bottom line through proactive, involved and customized mean s in a manner that is dynamic, forward-looking and outward-oriented. In effect, the firm looks at the links between corporate strategy and strategic financial management to see how the process can play a positive and proactive position in