Snc lavalin capital structure

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Financial Management 3-205-04A Professor Pierre Chaigneau

TEAM ASSIGNMENT – SNC LAVALIN

Alexandre ROUGERIE-DUROCHER Simon LEMIEUX Simon WANG Laetitia WONG

Contents
SNC Lavalin Analysis of the optimal capital structure................................................................................... 3 Engineering and Construction Business overview.................................................................................... 3 Current firm capital structure ................................................................................................................... 3 Equity .................................................................................................................................................... 3Debt....................................................................................................................................................... 3 WACC .................................................................................................................................................... 3 Credit Rating............................................................................................................................................. 3 Interest Coverage Ratio ............................................................................................................................ 4 Life-cycle ................................................................................................................................................... 4 Optimal Capital Structure......................................................................................................................... 4 Conclusion ................................................................................................................................................. 5 ANNEX 1.................................................................................................................................................... 7 ANNEX 2 .................................................................................................................................................... 8 ANNEX 3 .................................................................................................................................................... 9 ANNEX 4.................................................................................................................................................. 10 SNC Lavalin Analysis of the optimal payout policy ..................................................................................... 11 Description .............................................................................................................................................. 11 Analysis................................................................................................................................................... 11

SNC Lavalin Analysis of the optimal capital structure
Engineering and Construction Business overview The Canadian engineering and construction industry is a complex and rapidly evolving sector that presents also great rewards. The desire to exploit goodgrowth opportunities, to control costs and to complete the projects on schedule and on budget is very difficult and it forces every player to be excellent. SNC Lavalin is an enterprise that for many years has conserved a high level of earnings and has kept a stable operating margin (See Annex 3). In fact, one of the main reasons for its success is the firm’s diversification in many differentmarkets and regions in the world. The business is presently in a good period because of the world’s governments are investing a lot in infrastructure. This has helped SNC-Lavalin to stay in good financial health through the crisis. Current firm capital structure Equity As we can see in the Balance sheet, the equity part is quite easy to define. According to the Interim Consolidated Financial...
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