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2,000 words report for a corporate finance MBA coursework
Assignment tasks: Select a company listed on an internationally recognised and well-established Stock Exchange (see below for choice of company):
Discuss how successful the company has been at delivering value to its shareholders over the past 5 years.
Complete an EVA analysis of your company for the last 5 years. Clearly show your work rather than using final EVA numbers from another source.
Analyse the Total Shareholder Return (TSR) of the company for the past 5 years, including any key events and compare with a similar company or appropriate benchmark.
Undertake a current valuation of the equity in this company, using the following methods:
Net Asset Value.
Comparable Ratios (e.g. P/E, P/B, EV/EBITDA). You will need to look at both past results and comparable firms to analyse and justify an appropriate valuation. Note that simply multiplying the current ratio by the recent earnings (or book value or EBITDA) is not sufficient. An audio recording discussing comparable ratios can be found in Blackboard under the appropriate Unit.
Discounted Free Cash Flow. You will need to forecast each component of free cash flow (e.g. Sales, costs, capex, etc.) for at least 5 years of forecast cash flows and estimate a terminal value, and then discount them back at the appropriate cost of capital which you estimate yourself. Make sure to justify all of your assumptions. You can find information to support your forecasts from sources including the MD&A section of the company’s annual report (or its competitors), news stories, industry trade publications and government or think tank studies on the industry. Videos on how to estimate cost of capital and how to forecast free cash flow can be found in Blackboard under the appropriate Unit.
Attempt to reconcile any differences in value that you obtain by using these different methods and state (with reasons) what value you think is correct for the company.
You must clearly explain all of your assumptions used in the valuations.
Choice of company: Choose a listed company on a major stock exchange (e.g. London, New York, Tokyo, Mumbai) for which you can access the share price data over the past 5 years. Do not choose financial firms since these are generally much more complicated to work with. Large companies will provide financial data on the websites, often under a section titled ‘investors’. More information on choosing an appropriate company can be found in the formative assessments. You will see throughout the module that BCE in Canada is used as an example, so you may not choose this company.
Guidelines: The report should include:
- a key point summary of your conclusions.
- graphical illustration, where appropriate.
- a bibliography of sources of information used and references to texts or other material drawn upon. You should follow Harvard referencing guidelines which can be found on the Bradford University library website.
detailed tables, extracts or copies of financial information should be placed in the appendices if they are necessary to understand your report. You should only include appendices if you refer to them in the body of the report. You do not need to include the entire financial statements.
- You should not embed spreadsheets in the Word document will not be sen by the marker. You should only copy those tables which are important for the reader to nderstand your work.