Economics Case

4

Before submission, you should proof-read the report several times. The text should be free of

typological and grammatical errors. Tables, charts and figures should be appropriately

labeled and numbered.

Word limit requirement:

The word limit of the assignment is 2000 words, excluding the executive summary, tables

(only those containing numbers and statistics), charts, references, and appendices.

Hints:

As a starting point, it may be useful to consider the following questions (among other issues)

when you prepare the report:

Analysis of capital structure changes: How long should your investigation period be? How do

you measure capital structure? Should you look at different types of debt? Did the company

announce any major debt issues, share issues, or capital restructuring program during the

investigation period?

Impact of the GFC: When did the GFC occur? How did the GFC influence debt and equity

market conditions in general? How did it impact the industry that the company operates in?

How did the company change its capital structure in response to the GFC?

Optimal capital structure: What are appropriate peer firms (2 or 3 may be sufficient) that can

be used for comparison purposes? How have capital structure measures of these firms

changed in recent years? Compared to the industry, is the debt/equity ratio of your firm too

high? Internally, are the asset structure and expected cash flows of your firm suitable to this

level of debt? Is there an under-utilisation of debt (and its tax-shield benefits)? Externally,

how should the firm fund new projects in the short term given the current debt and equity

market conditions?