The board of swift should consider the following factors in evaluating the proposed acquisition.

Suitability

Ambion is the 3rd largest industrial country in the world and is densely populated and have high standard
of living swift is the largest logistics company of ambeon the logistics market place in amberon is
extremely competitive and mature. The profitability of logistics sector has reduced this is due to heavy
tax of fuels and reducing expenditure on roads in favor of alternative foam of transportation
government has also announced new taxes on vehicles which have high carbon emission and has also
reduced the maximum working hours and increased the minimum wages for employees.

Ecuria has experienced economic growth in recent years due to which standard of living has been
improved and has increased demand for goods additionally ecurias government has invested heavily in
infrastructure particularly the road transport system.

EVM is a state haulage operator it has 700 modern trucks and hold major logistics contracts in the
country EVM is praised for its prompt delivery additionally due to high barrier to entry there are no
significant competition for EVM.

Acceptability

The management of swifts believes that there management capabilities will enhance the profitability of
EVM but swift has no experience for acquiring foreign company as well as has no work experience in
ecuria although swift has experience in acquisition of local companies.

The gearing of swift seems to be high this might create problems in raising finance through debt issue so
swift might need to consider other sources of finance.

Since Swift is the market leader in ambeon it has adequate IT system and has a positive brand image.

Feasibility

Swift EVM

ROCE 18% 18.18%

GP margin 17% 20%

NP margin 9.15% 5.75%

Current ratio 1.55 1.14

Quick ratio 1.15 1.05

Gearing 60% 43.47%

 Interest cover 8 5

The ROCE of both company is similar whoever there is increase in gross margin this may be due to high
revenue or due to decrease cost of EVM however the net profit margin is significantly lower for EVM this
con be due to increase Administration expense or can be due to high tax rate in ecuria.

The current ratio of EVM is significantly lower this can is mainly due to low amount of inventory held by
EVM since there is not a significant difference between current and quick ratio of EVM. The gearing ratio
of EVM is lower which a good sign finally the interest cover of EVM is low as compared to Swift but it is
ok since it covers finance cost many times.

The management of swift should consider the cultural differences since EVM is located in other country.