Financial Analysis

3910 words - 16 pages

A.In what ways has the company you have chosen made use of international financial market as a source of finance.Stora Enso is an integrated paper, packaging and forest products company producing publication and fine papers, packaging boards and wood products, areas in which the Group is a global market leader.Stora Enso sales totalled EUR 12.8 billion in 2002. The Group has some 42 500 employees in more than 40 countries in five continents and about 15 million tonnes of paper and board annual production capacity. Stora Enso's shares are listed in Helsinki, Stockholm and New York.Stora Enso serves its mainly business-to-business customers through its own global sales and marketing network. A ...view middle of the document...

Transparent management and criteria alongside the FTSE brand make FTSE4Good the index of choice for the creation of Socially Responsible Investment products.Stora Enso, has a Consolidated Financial Statements system, which is regarded as the most clear method for those Multi National Companies that have several subsidiaries all over the world, and want to make easier the way they report their statements. The Consolidated Financial Statements, report the results of operations and financial condition of a parent corporation and the subsidiaries in one set of statements.Stora Enso's funding policy states that the average maturity of outstanding loans and committed credit facilities covering short-term borrowings should be at least four years and the most seven years. The policy further states that the Group must have committed credit facilities to cover all known funding needs, commercial paper borrowings and other uncommitted short-term loans.In accordance with the funding strategy, the Group diversifies sources of finance by increasing debt capital market issues, thus allowing the Group to take advantage of the longer maturities available in the corporate bond markets.The company uses Public issues in order to get debt, such as eurobonds, euro commercial paper, and medium term notes, as well as syndicated bank facilities, and Swedish commercial paper.The syndication of loans has enabled banks to spread the risk of very large loans among a number of banks. Syndication is particularly important because many MNEs need credit in excess of a single bank´s loan limit.Debt (2002) = 7 290.9This MN Company, gets equity by using different types of shares: ADR´S American depositary receipts are certificates traded in the United States and denominated in U.S. dollars. ADRs are sold, registered, and transferred in the US in the same manner as any share of stock, with each ADR representing some multiple of the underlying foreign share .As we can see on page 25, Stora Enso has diversified its position by having share listing, shares voting rights, ADRs, and registers, distributed in different levels of holders. The reason of why Stora Enso has chosen to participate in the NYSE is mainly because they can improve the liquidity of their shares more than could be achieved with similar listing elsewhere.Equity (2002) = 8 156.9Debt/Equity Ratio. Gives us an idea of the percentage of debt and equity that it has been used, and gives an indication of the effect of gearing on equity income, know as the leverage effect.In this case:Debt Interest-bearing net liabilitiesEquity Equity + minority interests= 3 055.1 * 100 = 37%8156.9 + 30.4This ratio about long term borrowing to equity shows that, of the total value 37% was financed by interest-bearing borrowed funds. This gives some indication of the extent to which interest payments will have to be made.B. In what ways has the company tried to reduce its financial and business risks?Risk is defined as the chance...

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