Topic: corporate finance Diageo

Order Description This is an individual assignment. You will be provided with questions regarding the Diageo case, which is the capital structure case we will cover in our first day of classes. The questions will familiarize you with the case and also evidence why leverage decisions matter for businesses. Please note that the questions you need to answer and submit for this assignment are clearly indicated in the Assignments section of myCourses. Just click on “Pre-assignment Diageo (Individual)”. While the Modules section also usually contains a case guide with guidance questions for cases (for Diageo, these are found as “Diageo questons.pdf” under Sessions 4 and 5 in Modules), these are only provided to help you and your group prepare for the case analysis in class. Thus, you are not required to submit your responses for case guide questions. Limit yourself to answering the questions in the assignment section only. A high quality response will fully address each question. It will also provide a quantitative analysis (when relevant, as not all questions are quantitative) in support of your statements. To clarify using an example from your Financial Management course: Simply stating that “Firm X is in good financial health because it shows high profitability” is NOT enough. You must provide pertinent ratios and calculations as part of your narrative so that the reader can understand the quantitative evidence that supports your statements. Avoid “dumping” all your numbers in an annex at the back of a report, or simply submitting an excel file. I will not “chase” the answer. Rather, please insert the table or relevant calculations within your narrative if submitting a Word file. If a table is used and inserted in your report, please make sure you assign a name to it (Table 1, Table 2, etc.) and use this name when referring to the table. There is no length limitation to your case report. The work you submit will be graded according to the way I can answer the following: (1) Did you address the questions I have asked? (2) How does the quality and detail of your response compare to that of the other groups? 1. How has Diageo managed its capital structure? Do you agree it is conservative? 2. Using the data provided by the simulation model presented in the case and your personal assessment, what capital structure would you recommend to Diageo, more or less debt than it currently has? For this question, the quantitative part is already provided by the case (see Figure 2 in the case). Thus, you should take the numerical results in the case as yours, and thus draw your own conclusions in order to respond (no need to review the Monte Carlo description). While it may seem trivial (a reading of the graph), you can also suggest modifications resulting in higher or lower leverage levels than those recommended by the simulation Comment: Please note that the case questions provided as a guide in Modules, Sessions 4 and 5, contains three questions. Question #2 of the Case Guide is not being asked as part of this assignment. We will address it in class, together.