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it will be deteriorated further to 60% if £ 5 million debt is taken from the bank. It can give rise to financial risk

majorly the company might not be able to meets its current or future debt obligations in form of high interest rates payments along with principal. It will also harm the profitability and in turn the company’s ability to declare and pay dividends which fortunately it is paying in both recent years. Excessive financing can also inhibit additional investment into the company’s business. The interest cover ratio is needed to be high to indicate the number of times the company is able to disburse interest payments. By issuing more debt will weaken the interest cover ratio. Debt to equity ratio of 61% is highly recommendable and is also better than the current state however additional financing is strictly not recommended.

both the entities have different lines of businesses. While BEP is engaged in the design and distribution of toys and children games merchandises but KFun is involved in the broadcasting and advertising business. It will turned out to be a new challenge for BEP to get acquainted with new ways of doing things and entering into new field which it does not acquire the relevant skill or specialized knowledge of running the affairs of the business. Broadcasting companies also have to follow certain laws prescribed by the regulatory authorities and non-compliance with them can result in severe repercussions. Moreover

since both organizations have diversified workforce. This diversity can cause conflicts among the work peers because of different methods of work style

the annual average increase in revenue by 17% is not justified keeping in view the current economic situation. It is not feasible if we keep the previous track record of actual versus budgeted of the year 2008 where the advertising actual sales were 7% less than budgeted. Since advertising is considered to be the discretionary expense of companies and it is most likely to be curtailed during recessionary periods. The rebroadcast/content sales on average of 2-3% are a valid ground because previously it was 9% more than the budgeted. In contract the increase in employee costs in accordance with average number of staff isn’t seem reasonable because in recessionary period usually the entities either resort to lay-offs or redundancies or retain the same employees by enhancing their efficiencies. Furthermore

the significant increase in capital expenditure (CAPEX) on intangible assets is also not consistent with amortisation charge. It shows that either amortisation is not charged on additional CAPEX on intangibles or CAPEX is inaccurately included in the cash flow forecast. However