ODYSSEUS LTD

Odysseus Ltd



Odysseus Ltd

Introduction

The financial performance of Odysseus Ltd shows that the major portion of the company's assets is comprised of liabilities; which are not a good indication for the company as the company's short term and the long-term debts are increasing. However, the company's equity seems good or satisfactory but it should be high as compare to the liabilities (Moon and Bates, 1993, pp. 139-152). In addition to this, the total assets per share and net assets per share reflect that the Odysseus Ltd's assets structure is in good shape which shows that the company can meet its financial obligations that is liabilities is some sort of financial loss occur (Brignall, 2007, pp. 23-39). In addition to this, past studies states that the financial analysis are to determine whether there are liquidity problems, the study of profitability determines the evolution of the company and return on invested capital, management and analysis of related variables involved in the short-term financing, obtaining rotations and time of collection and payment means.

Key Financials

(As of 09/ 30/ 2011)

Income Statement

Revenue

2,973 m

Net Income

121 m

EPS - Net Income - Diluted

0.28

Revenue per Share

6.97

Balance Sheet

Total Assets

4,003 m

Total Liabilities

2,502 m

Shareholders' Equity

1,501 m

Total Assets per Share

9.32

Net Assets per Share

3.49

Cash Flows

Cash from Operations

363 m

Cash from Investing

482 m

Cash from Financing

233 m

Cash Flow per Share

0.84

Fundamental Features of the CAPM for Odysseus Ltd

For Odysseus Ltd CAPM calculates the appropriate rate of return required to discount future cash flows that will produce an asset, given the risk assessment is that asset. Betas greater than 1 symbolize that the asset has a higher than average risk of the entire market betas below 1 indicate a lower risk. Therefore, an asset with a high beta should be discounted at a higher rate as a means to reward the investor for taking the risk that the asset carries. This is based on the principle that investors from riskier investments require higher returns.

The capital asset pricing model is a model often used in financial economics. The model is used to determine theoretically the rate of return required for a particular asset if it is added to an investment portfolio well diversified. The model takes into account the sensitivity of the asset at risk non-diversifiable also known as market risk or systematic risk , represented by the symbol of beta (ß), as well as expected market return and the expected return of a theoretically risk free asset (William, 2008, 425-442). CAPM is useful for the financial managers as they can use capital asset pricing model for making a number of decisions concerning financial dispositions. Perhaps the most common corporate financial decision is the valuation of a capital investment opportunity. Capital asset pricing model provides information that includes estimation of the investment's after tax cash flow, prediction of the investment's risk, estimation of the cost of capital (the expected rate of return demanded by investors for equivalent risk assets (Arnold, 2005, 872 -905). In addition to this, calculation of the net present value of the investment by discounting the cash flows using the ...