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Use your company or select a public company (please use The Coding Network or Johnson and Johnson), and analyze the methods of operational and financial leverage that should be considered in determining whether to acquire another organization. Financial leverage includes internal financing, equity financing, bond financing, reducing dividends to increase internal cash flow, and using leasing to acquire capital assets with more leverage, thus conserving cash flow.
Operational leverage should discuss the appropriate cost of capital tools, including weighted average cost of capital and the capital asset pricing model. Interpret the various operational risks and how to mitigate them in your selection of operational and financial leverage decisions.
Describe any intangible and non-financial factors that affect your proposed financing and operational financing decisions. Present a recommended solution and the rationale behind your decision. Keep in mind that your solution may be a combination of operational and financial leverage.
Writing the Final Paper
The Final Paper:
Must be eight to ten double-spaced pages in length (not including the title and reference pages), and formatted according to APA style as outlined in the Ashford Writing Center.
Must include a title page with the following:
Title of paper
Course name and number
Must begin with an introductory paragraph that has a succinct thesis statement.
Must address the topic of the paper with critical thought.
Must end with a conclusion that reaffirms your thesis.
Must use at least five scholarly sources in addition to the text. (Brealey, R., Myers, S. C., & Allen, F. (2014). Principles of corporate finance. (11th ed.). New York: McGraw-Hill Irwin)
Must document all sources in APA style, as outlined in the Ashford Writing Center.
Must include a separate reference page, formatted according to APA style as outlined in the Ashford Writing Center.