Bluescope Application Analysis

PROSPECTIVE ANALYSIS (Appendix A)

1. Key Assumptions

a. Sales ripening

In this valuation, the gross revenue growth would be fictional declining in the first both years (2011 and 2012) due to lengthen oversupply and demand shortages in vane. This weakening in sales growth could be worsen by falling in steels equipment casualty in the future as a result of the prolonged high global steel availability in steel market. Whilst, strengthening in Australian dollar and Queensland flood would be still becoming a major stress in BlueScopes sales for the adjacent two years. Finally, the sales growth would be assumed maturement in the average growth of sales for the next 3 years from 2013 to 2015.

|Sales offshoot | | | |
|2011 |2012 |2013 |2014 |2015 |
|-5% |-5% |3% |3% |3% |

b. Others assumptions (Appendix B)

Profit Margin and Dividend payout dimension would be estimated growing constant on average for the next five year, which are 4.56% and 40% respectively. Furthermore, ATO and woo of debt would be utilise the current ATO ratio (1.28) and cost of debt (6.



87%), and it also would be assumed constant in subsequently years. Another assumption is although in historical data BlueScope has other operating income, but since the appreciate was insignificant, accordingly it would be considered to be zero.

2. Valuation

In this valuation models below, CAPM and WACC (Appendix C and D) would be utilised for calculating the cost of equity and cost of the firm respectively.

a. Dividend Discounted Model (Appendix E)

Under this method, the equity value would be calculated on the basis all future dividends discounted underpin to the present value. In the DDM valuation, BlueScopes dividend would be assumed growing at a stable rate in sempiternity starting in 2013. The terminal value beyond the hardcore dividend forecast horizon is stimulated mostly...If you want to get a full essay, order it on our website: Ordercustompaper.com



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