Part A

1. Acquisition analysis of Queensland on 1st Jul 2018

It enables the management by the well analysis should answer such questions as:

What is the maximum price that must paid for the target company?

In the acquisition analysis (Liu et al 2016) it is the prime and important aspects in the acquisition analysis. To evaluate the purchase price it is required to see the worth of total assets of Queensland. The cost of total investment (Hou, Xue and Zhang 2015) is given as $650000. It has given that the assets are fairly valued. Since we do not have a detailed information, We will depend on the given information and it is assuming that the price paid for the purchase of the company may be fair.

What are the principal areas of risk?

Referring to the above point, we just saw that the total value of assets of Queensland which we expected as fair value as per given information. But we have to find the main risk factors in this segment. Balance sheet of Queensland provides the liabilities side and assests side (Duijm and Wierts 2016), Liability side shows share capital $235000 + Retained earnings $115000. So in total it comes to $350000. As the Assets side total is $650000 and the same amount will be on the liabilities side i.e $650000. It implies if we ignore share capital (Hirakata and Koike 2018 ) & Retained earnings (Yemi and Seriki 2018) from $650000, we got balance $300000 [650000-350000]. As we do not have a detailed information we have to assume that the balancing figure $300000 is nothing but loans.

Therefore, it is a very crucial risk factor where the company has a sizable amount. It must be agreed that it is less than the total share capital and retained earnings. It may still make a burden and interest and cash crunch due to the interest payments (Baik et al 2016) and the payments of interest loans if it is due for repayment. It is also shows that the Wholesole Ltd. paid 300000 as Goodwill to Queensland [650000 total assets – share capital & Retained earnings 350000]. It is paid comparatively high price.

What are the earnings, cash flow, and balance sheet inferences of the acquisition?

In the acquisition analysis, This key aspects is also very important. Since the purchaser has paid excessive price dfor the acquisition we can consider the proposal at that price where the sales income is excellent, profit ratio is excellent. In this given analysis, there was no such informationon, by which we we can evaluate P/E ratio, Price/Share ratio (Warrad 2017) and the other profitability ratios (Abdul 2017).

What will be best financing acquisition?

Analysing the financial statements (Palepu et al 2020) is the best approach of the financing acquisition of Queensland.

Acquisition analysis

Part B

In order to capture more profit and gain more consumers and laos increase the reputatiuon of the business, there is a reason to acquiring the overseas business. Since they are facing some challenges to acquire the new business. Here it includes: language, different time zones and culture. There will some impact on the running of business such as taxation, leagal system, business financial culture. Across the overall general accounting IFRS have made as an overall vernacular. The choice of IFRS helps to reduce the expenses of Multinational Corporation which arrange more than one plan of records for the different national region. Regardless the accounting calling is not made to the point where it can control accounting and financial specifying which efficiently must do to regulating the accounting and financial thing. Before the acquire the first thing, which needs to consider the language barrier and how this might influence his business and the different time zone which he needs to consider a way of how he is going to be able to manage his business.

References:

Abdul, A.A.A., 2017. The Relationship between Solvency Ratios and Profitability Ratios: Analytical Study in Food Industrial Companies listed in Amman Bursa. International Journal of Economics and Financial Issues, 7(2), p.86.

Baik, B., Cho, H., Choi, W. and Lee, K., 2016. Who classifies interest payments as financing activities? An analysis of classification shifting in the statement of cash flows at the adoption of IFRS. Journal of Accounting and Public Policy, 35(4), pp.331-351.

Duijm, P. and Wierts, P., 2016. The effects of liquidity regulation on bank assets and liabilities. International Journal of Central Banking (IJCB).

Hirakata, N. and Koike, Y., 2018. The Labor Share, Capital-Labor Substitution, and Factor Augmenting Technologies (No. 18-E-20). Bank of Japan.

Hou, K., Xue, C. and Zhang, L., 2015. Digesting anomalies: An investment approach. The Review of Financial Studies, 28(3), pp.650-705.

Liu, G., Knight, J.D., Zhang, J.P., Tsou, C.C., Wang, J., Lambert, J.P., Larsen, B., Tyers, M., Raught, B., Bandeira, N. and Nesvizhskii, A.I., 2016. Data independent acquisition analysis in ProHits 4.0. Journal of proteomics, 149, pp.64-68.

Palepu, K.G., Healy, P.M., Wright, S., Bradbury, M. and Coulton, J., 2020. Business analysis and valuation: Using financial statements. Cengage AU.

Warrad, L.H., 2017. The Effect of Market Valuation Measures on Stock Price: An Empirical Investigation on Jordanian Banks. International Journal of Business and Social Science, 8(3), pp.67-74.