Golden Agri-Resources LTD Case Solution
It has also been analyzed thatsales volume is declining due to the fact that the company has been subjected to high operational cost and interest rates, which would not allow to increase the shares price in the future. When it comes to the valuation of the companyâ€™s recent performance, then it indicates that it has less Price/Earnings ratio as compared to the industry standards due to the lack of performance to control the cost and inflation adjustments.
The price to cash flows generates ratio less than the industry level and therefore, its hows that it would become bankrupt if enough cash would not be generated to pay off the amount subjected to the interest and other activities.On the other hand,the ratio of dividend yield indicates that Golden Agri-Resources would not provide the required dividends due to the lack of ratio as compared to the industry level. Therefore,by looking at its overall performance, it could be said that the company is still in the survival stage where itshould increase the operational activities by reducing the cost in terms of operational value in order to sustain the growth and stand in a competitive position as it was in the past.
On the other hand, the position of Wilmar International (Competitor) indicates that it has high valuation results as compared to Golden Agri-Resources. It also means that its position is better than the latter company.Therefore,according to the results, the price to earnings ratio is high as compared to the industry standards, also the price to cash flows is more than that of fixed industry level. The most important information for the related investors is to analyze the dividend yield ratio which is high against the previous company as well as the industry standards. Hence,it is concluded that Wilmar International position is better than Golden Agri-Resources and thus, it would maintain its position in order to impose the threat for the latter company under the terms of survival.
Another competitor of Golden Agri-Resources is Indofood Agri-Resources, whose function is the same as that of Golden Agri-Resources,therefore it shows that its position is not better than the mentioned one due to poor performance as per the industryâ€™s standards. However, the result of price to earnings ratio is good due to the fact that it earns more than the industryâ€™s standards but unable to repay the certain number of funds to the creditors as well as the shareholders because of high debt and subjected to inflation under the selected country.
Therefore,it is concluded that Golden Agri-Resources is still fighting for its survival but has the ability to comeback due to large amount of funds and has the vision to expand the business under the fixed strategies. Also, it would tend to generate high stock price due to the declining volume of shares overtime in the near future under the method to shutdown plants in the less produced countries.
Stock valuation of Golden Agri-Resources
The assessment of the stocks can be said as the most important element for the shareholdersâ€™ knowledge as it would allow them to take a decision regarding holding the stock or withdrawing from the particular company if the performance would not in a positive direction in order to analyze the overall information about the outcome of the related invested amount. Various tools and techniques would allow to manage the shares price under the shareholdersâ€™ interest and determine the related risk and return that would have been implemented in the future. Thus, the following analysis has been taken into consideration to value and assess the stockâ€™s performance over the particular year given below:
Analyzing the beta through using the traditional stock assessment factors
In order to analyze the beta of Golden Agri-Resources ltd, it is identified that various tools would be applied to generate the final results in the shape of Beta. The first tool consists of expected return of the stock by using the historical results, this factor shows how much dividend would the company give to its shareholders in the future……………..
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