Base on VISA IPO in 2008 (the credit card company)
A. A brief overview of the company's current financial position and its IPO
B. please assess the company's motivation for the decision of undergoing IPO - is it economical? with theories/ sources
analyse the financing mix : debt? equity? rational? with the tools of WACC, CAPM, MMM theory, Rate of Return , net present value, payback period, Profitability Index etc. other tools that is applicable to analyse Visa' financing mix
1. Please pick 3 of the tools to calculate - please attached steps of calculations.
2. Please provide an analysis as what does the results of the calculations mean in an investor point of view.
3. Explain and annotate financing mix of VISA.
3. WACC calculation can be done in here: http://thatswacc.com/ , entering the ticker symbol 'V'.
4. Detailed financial information can be found on bloomberg.com.
C. Briefly in bullet points, evaluate the outcome of visa ipo - did it increase the market value of corporation? Did it clear the debts?
Please find tutorial and help related to financing mix in VISA Inc in the attached file.
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Visa Inc. is USA based global financial services corporation engaged in providing products and services that help to make payment in more convenient and secure way throughout the world (Visa Inc, 2012). The main products of the company are credit card and debit card through which it makes the payment process smooth and secure. The paper will present brief overview of its current financial position along with the IPO launched by the company. The paper will also discuss the motivational factor behind the decision to undergo IPO. In addition to this, it will also describe the financing mix adopted by the company with the result derived from the launch of IPO.
Visa's Current Financial Position
The current financial position of visa determines a strong financial growth of the company. With net operating revenue of record $9.2 billion in 2011, the company determined a sound financial position. There was 14% increase in 2011 in the operating revenue of the company compared to year 2010. The sound financial position of the company is also determined through the increase in adjusted net income in compared to the 2010 almost 22% to $ 3.5 billion. In the last five years, the company has earned almost 46% on an average (Annual report, 2012). The effective management of the liquidity and the capital resources has also contributed to the financial growth of the company. The company has sufficient liquidity to meet its need of projected liquidity for more than 12 months. Apart from this, it has also invested much higher amount in its operating activities that also reflect an increase in net income of the company from year 2010.
The IPO of the company is also regarded to be attractive. Since, from its introduction, it has seen enormous growth. The IPO of the company was launched in 2008 at $55 and its current price is $121 (Modestus, 2012). It determines that it would be quite beneficial for the investors to invest in the IPO of the company. From its inception, it has touching the new heights of growth in the stock market. The good track record of performing well in the market has successfully attracted the number of investors for the company. Overall the IPO of the company could be regarded as providing high rate of return with its powerful stock chart.
Visa Decision to Undergo IPO
This is most important phase for any of the company to go public. Visa has several reasons for undergoing IPO. The most important reason behind the introduction of IPO was its constant growth and requirement of capital to meet that growth. The CEO of the company itself determines this statement of providing maximum benefit to its investors through its long-term growth (Tirole, 2006). In order to determine its long-term growth, it is important for the organization to determine its position in the market through its IPO. Apart from this, access to capital was also one of the reasons behind the visa decision to undergo IPO.
Since the time Visa has introduced its IPO, the market was facing severe financial crisis. So the companies were not in a position to bear any kind of risk. So in order to access capital from the market for its further expansion, company has taken the decision of undergoing IPO. Apart from this, determining its effective ...
The solution discusses VISA capital budgeting.