University of Miami Disney Acquisition of 21st Century Fox Report

Prior to beginning work on this assignment, read Chapters 2, 17, 19, 24, and 27 in the textbook, the McNichols and Stubben (2015) and Singh and Mogla (2010) articles, as well as the Financial Statement Analysis in Mergers and Acquisitions (Links to an external site.) online resource and https://hbr.org/1979/07/strategic-analysis-for-mor…. Carefully review the Company Profile and Due Diligence Guidelines document attached as a word document. You will support your findings and recommendations with evidence from at least six scholarly and/or professional sources in addition to the required annual reports for Disney the acquiring company as well as 21st Century Fox the target company. (These may include items such as the textbook, industry reports, and scholarly articles.) Be sure to include any links to professional websites used as references or to access company information.

In this assignment, you will prepare a financial analysis for the Disney acquisition of 21st Century Fox. This analysis will include items 3, 5-8, and 10 from the Company Profile and Due Diligence Guidelines document attached.

The completed report must include the following elements:

1/ Analyze business valuation techniques, and compute, summarize, and identify trends for the following financial ratios for the target company:

• Inventory turnover for the past three years
• Price to book value for the past three years
• Price to earnings for the past three years
• Sales to accounts receivable for the past three years
• Sales to inventories for the past three years
• Sales to fixed assets for the past three years
• Earnings to book value for the past three years

2/Create sales profiles for both the acquiring (Disney) and target company (21st Century Fox), including the following:

• Description of the market
• Gross and net sales for the past three years
• Comparative advantages and disadvantages
• New developments and industry trends
• Research program, cost history, and scope results
• Analyze the earnings and dividends for both companies, including the following:
• Earnings records for the last three years
• Earnings comparisons with the industry for the past three years
• Dividends and earnings records for the past three years in total and per share
• Potential economies
• Analyses of selling and general administrative expenses
• Evaluate the short-term and long-term assets for both the acquiring and target companies, including the following:

3/ Relationships of cash to current liabilities

4/ Pricing methods

5/ Accounting methods and procedures

6/ Analyses of investments

7/ Evaluate the short-term and long-term liabilities for both the acquiring and target companies, including the following:

• Long-term loans outstanding and terms
• Dividend and interest arrearages
• Contingent liabilities: warranties, patent infringements, loss contracts, and compensation for services
• Pensions
• Commitments for new buildings, machinery, and inventories

8/ Evaluate three-year projected financial data for the target company, including the following:

• Assumptions for the projected pro forma financial statements
• Projected earnings forecast, including income statements and statements of cash flows