Empirical Application Of Corporate Finance Theories: The Analysis of Ferrari

Abstract

The aim of this dissertation is to provide an analysis of the luxury car maker Ferrari using modern corporate finance theories. The analysis is accordingly divided into three parts. The former investigates Ferrari’s risks and returns. In particular, an analysis of the costs of Ferrari’s financing components is conduced and an evaluation of the existing investments is made. The company’s costs of equity, debt and capital will therefore be estimated and they will be compared with the current and historical investments’ returns. The second part instead, performs an analysis of the company’s capital structure and its dividend policy. Once the analysis of the current financing choices is fulfilled, the optimal capital structure for Ferrari is determined and any action to be taken to reach the optimum is proposed. Ferrari’s dividend policy is then examined. In the third and final part, an evaluation of Ferrari through the Discounted Cash Flows (DCF) method is accomplished and the relative conclusions are drawn.