MAN4030M: Bradford MBA- Corporate Finance- Report Writing Assignment

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Internal Code: MAS1781
Report Writing Assignment:

Task:

Aim
The assignment is designed to test your understanding of corporate finance and explores a number of areas within the module by applying your learning to a real company. There is no perfect answer and therefore you should state your assumptions clearly and make good use of appendices. Remember, this is not a strategy or marketing assignment, so focus on the finance!

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.
1. 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.
1. 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.
2. 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.

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Posted on : February 01st, 2018
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