Corporate Finance Management

Corporate Finance Management

 

The references should be relevant rather than numbers (but at least 10 ref academic+websites,
articles, reports)
1. Financial performance. Apply financial ratios, new and old ones
2. Risk profiles – risk parameters that might affect the company, COVID risk and other risks
and mitigation measures, market risk, volatility of share prices and etc. If you see the
price of share differs then explain what is the risk
3. Capital structure, equity issues, explain whether the firm should change, if too much
leverage and reduce the debt, WACC, diagram of WACC/Debt,
4. Dividend – comment whether the company is generous or what policy is followed by the
company. Whether there is growth opportunity, if generous you can comment that the
company can refrain a bit to lead to high growth. Make suggestions
5. Prospects and valuation – based on our hypothesis
Hint 1 – The questions look like almost same in Annual Reports of any company. You can start
with this.
Hint 2 – Show interpretation of ratios. You can use readymade ratios, but explain the data.
What we see in data.

 

Financial performance. Apply financial ratios, new and old ones

 

Abstract
2. A brief description of the company (i.e. activities, structure, corporate governance etc.)
– max 1 pages (250 words max).
3. Financial performance – depends on interpretation, but normally 1000 words.
4. Risk profile
5. Optimality of capital structure choices – Equity, debts, describe what is current capital
structure is compared with industry, analyze WAC or VAC (U shape), use couple of
scenarios of different capital structures the firm can have, add or decrease debt in
scenarios.
6. Dividend policy –
7.

 

Prospects and fair valuation of the firm using a valuation model (i.e. a dividend or a cash
flow discount model) – Valuation of a company.

 

Dividend discount model or tax discount
model or price multipliers, not net present value. You can apply different discount
models but you can have several scenarios regarding growth rate of company. For
dividend discount model you should have an assumption on growth rate of company.
Make model in Excel and try 2-3 different assumptions for growth rate of a company
and get 3 different valuations. Mostly tables – 500 words. Mainly start feeling the Table
of Contents and try to explain. Read the section 2 of overheads. Read a couple of
examples. Replace the numbers in the example with the numbers of the company. Find
valuation report of a company. Focus on the examples of discount model valuation.
Make forecast.
8. Small conclusion and summarize whether to invest or not.
Ideally, you should compare your ratios to industry average and to the time frame, history and
industry average for ratios.
The structure of the assignment looks like an Annual Report of a company. You could get the
idea what you could write going through Annual Report. Investment companies publish
Valuation Reports. Find Valuation Report of Tesla, Amazon, and Nike. Doesn’t matter what
company you analyze and download and modify it to the company you analyze.
You can use Yahoo Finance, Morning star, Guru Focus, Damodaran.
Capital structure, debt and equity,
Part B
2
nd part: Use Excel for 2nd part of coursework. Copy and paste Excel and comment on it and can
add theory and describe shortly what methods you used. Can be a line what an NPV is. Not
much but can explain shortly and figure out what is written in Excel file. – Mainly use
presentation – Capital_Budgeting_and_Investment_Decisions
Consider operating cash flow while making decision on investment
Payback period method
Net Present Value method – Calculate using the Excel as in slide no. 36 of
Capital_Budgeting_and_Investment_Decisions
WACC – Weighted Average Cost of Capital
Internal Rate of Return – slide of Capital_Budgeting_and_Investment_Decisions