Question

Provide a real-life example of a long-term external source of finance (debt or equity issue) used by a blue-chip company in Hong Kong. A blue-chip company is defined as one of the listed corporations that constitute the leading stock index. In this case, the leading stock index in Hong Kong is the Hang Seng Index (HSI). In your essay, describe the nature of the financial arrangement (e.g. purpose, duration, risk assessment, etc.). In your opinion, explain whether this financial arrangement was a right move and suggest alternatives to this arrangement with reference to what you learned in this course and provide justifications.

*I need your own answer as I need to submit it on Turnitin!!!!

Thank you very much!

Answer 1

Ping an insurance is a HK Blue chip company which has used a lot of debt into its business to fuel its growth as it can be seen from its capital structure and debt equity ratio in which there is a presence of large mix of debt financing and equity financing into the overall business of the firm.

it has used debt financing to the efficient use as the return on capital has been higher than the cost of debth so there would have been a creation of shareholders wealth as well as increase in the overall market capitalisation on the basis of the farm.

There is a mix of duration in case of debt financing as it uses a wide mix of short term, middle term, as well as long term debt.

yes it was a right Move and if alternatives was needed it could have gone for equity financing or or selective debt financing or hybrid finishing as well .